FIRST  LESSONS 


ON 


MONEY. 


BY 


B.  T.  ROBERTS,  A.  M. 


A  man  should  make  it  a  part  of  his  religion 
to  see  that  his  country  is  well  goyerned 

—  Wilham  Penn. 


ROCHESTER,  N.  Y., 

1886. 


Entered  according  to  Act  of  Congi-ess  in  the  year  1886,  by 

B.  T.  ROBERTS, 
In  the  Office  of  the  Librarian  of  Congress  at  Washington. 


5f 


PREFACE. 


HAVE  writteft  this  little  book  because   I 

felt  I  must.     It  was  begun  several   years 

ago  when   silver  was   demonetized.     It   was 

not  finished  because  the  hope  was  cherished 

that  it  would  not  be  needed.     But  as   it   has 

become    evident  that   the   money  question 

.will  not  be  settled   until   the   people  settle 

^t,  t 'lis  unpretending  volume  has   been   pub- 

jlished  in  the  hope  that  it  may  help  them   to 

^  settle  it  properly  and  speedily. 

''^      For  the  last    twenty -five    years    I    have 

mingled   freely   with   the   common    people, 

from  New  England  to   California,  and  from 

Dal  :ota  to  Texas. 

I  have  witnessed  the  distress  that  the  bad 
management  of  our  finances  by  our  National 
Government  has  produced,  and  the  injury 
that  has  been  done  by  the  same  cause  to  our 
religious  and  benevolent  enterprises. 

Some  of  the  views  presented  are  in  advance 


IV.  PREFACE. 


of  the  times;  but  we  trust  they  will  be  seen 
to  be  sound. 

We  ask  a  careful  and  candid  perusal. 

B.  T.  Roberts, 

Rochester,  N.  Y.,  Maj^  1886. 


• 


CONTENTS. 


CHAPTER  I.  PAGE 

THE  SUBJECT  COMPRSHENSIBLE.  8 

Money  a  Human  Invention, a 

Wrong  Instruction, 10 

CHAPTER  II. 

IMPORTANCE  OP  THE  SUBJECT.  12 

All  Interests  Affected, 13 

Losses  From  Bad  Management,   -        -        -        -  15 

CHAPTER  III. 

MONET    NECESSARY.  17 

DiflBcuIties  of  Barter, 18 

Mill  and  Gibbon  quoted, 20 

CHAPTER  IV. 

WHAT  IS  MONEY  ?  23 

Prof.  Walker,  Dr.  Ely  quoted,         -        -        -        -  24 

Functions  of  Money,       ------  25 

CHAPTER  V. 

MATERIAL  OF  MONEY.  2S 

Leather  Money,       -------  29 

"Watered  Stock," .  30 

General  Choice, 33 


VI.  CONTENTS. 

CHAPTER    VI. 

GOLD  AND  SILVER.  34 

National  Debts,       -        - 34 

Stock  of  Gold  and  Silver,    ------  35 

Value  of  Debts  Doubled,       -----  36 

CHAPTER  VII. 

SILVER.  40 

Early  upe  of  Silver, 41 

Fluctuations  of  Value,            -----  42 

Adam  Smith  quoted, -    44 

Double  Standard, 45 

Ratio  of  Value, -    49 

Needless  Fear, 50 

More  Gold  than  Silver,      -        -        -        -       -  -    52 

Official  Statements, 53 

CHAPTER  VIII. 

PAPER  MONET.      .  58 

Its  Advantages, 59 

Macaulay  quot'  d, 59 

Preferences  of  the  People, 65 

CHAPTER  IX. 

COINING  MONEY.  07 

Our  Constitution, 68 

Jefferson   quoted,     - 69 

Should  be  Issued  by  Congress,         -        -        -  -    70 

Prof.  Jevons  quoted, 71 

National  Bank  Bills, -    72 

Interest  paid  National  Banks,       -               -        -  73 


CONTENTS.  vii. 

Capital  Released, 75 

Currency  Inflated, r^g 

"Fiat  Money,"      -        -        .        .        .        .        .        .  /j-g 

CHAPTER  X. 

BASIS   OF   PAPKR  MONEY.  82 

Venetian  System,        ...                -        -        -  83 

The  Bank  of  England,     -        .                 -        -  85 

The  Proper  Basis,        -----..  aa 


Their  Functions. 


CHAPTER  XI. 

BANKS.  90 
91 

Are  Profitable,     --......     93 

The  Chemical  Bank        ......  gg 

CHAPTER  XII. 

AMOUNT  OF  MONEY  NEEDED.  99 

Fraud  Encouraged, IqO 

"Innocent  Holders"    -------  103 

Letter  to  the  President,        -----  105 

Contracting  the  Currency,         -        -        .        .        .  i07 

Money  Stock  of  Different  Nations,     -        -        -  109 

CHAPTER  XIII. 

"elastic  CURRENCY."  112 

Going  into  Debt, 113 

Prof.  Walker  quoted, 115 

CHAPTER  XIV. 

DISTRIBUTION  OP  MONKY.  130 

Division  of  Property,        -        -        -        .        .        .  131 


Vlll.  CONTENTS. 

General  Distribution, 123 

Laws  Favoring  Great  Fortunes,     -        -        -        -  127 

Monopolies,    --------  igg 

CHAPTER  XV. 

HOW  TO  MAKE  MONEY.  143 

Suggestions,    - 144 

Rothschild's  Maxims, 156 

CHAPTER  XVI. 

CONCLUSION.  158 


FIRST  LESSONS  Oi\  MONEY. 


CHAPTER    I. 

THE  SUBJECT   COMPREHENSIBLE. 

^ONEY  is  a  human  invention.  Therefore 
<^^  the  money  question  is  a  question  that  can 
be  understood.  Wliat  is  made  by  man  can 
be  comprehended  by  man.  The  mechanism 
of  a  watch  is  intricate,  but  one  who  studies 
it  with  diligence  may  learn  all  about  its  con- 
struction and  movements.  So,  whoever  gives 
a  proper  attention  to  the  machinery  by  which 
the  wheels  of  trade  and  commerce  are  kept 
moving,  can  gain  all  the  knowledge  respect- 
ing it  which  is  necessary  for  practical  pur- 
poses. 

With  money  itself  every  person  in  this 
country  is  familiar.  He  has  used  it  from 
childhood.  It  is  a  great  help  towards  un- 
derstanding the  theory  of  any  thing  to  have 
some  knowle'lge  of  the  tiling  itself.     A  sail- 


10  FIRST  LESSONS  ON  MONEY. 

or,  brought  up  on  the  ocean,  can,  with  the 
same  amount  of  study,  get  a  much  more 
accurate  knowledge  of  navigation  than  he 
could  if  he  had  never  seen  a  ship.  So,  one 
familiar  with  money,  can  understand  the 
laws  by  which  its  issue  and  circulation 
should  be  governed,  much  more  easily  than 
he  could  if  it  was  a  new  invention  and  for 
the  first  time  coming  into  use. 

The  great  embarrassment  to  a  right  under- 
standing of  the  money  question  arises  from 
the  fact  that  what  instruction  the  people 
generally  have  had  upon  it  has  been  too  of- 
ten wrong.  They  have  to  unlearn  in  order 
to  learn.  Prejudice  is  worse  to  encounter 
than  ignorance. 

Mr.  Walter  Bagehot,  one  of  the  most  dis- 
tinguished writers  on  the  money  question, 
in  the  introduction  to  his  able  work  entitled 
"Lombard  Street,"  says:  "A  notion  prevails 
that  the  money  market  is  so  impalpable  that 
it  can  only  be  spoken  of  in  very  absti'act 
words,  and  that,  therefore,  books  on  it  must 
be  exceedingly  difficult.  But  I  maintain 
that  the  money  market  is  as  concrete  and 
ronl    ns   nnv  thin^   ol.«o;  thnt  it   cnn  ho  do- 


SUBJECT  COMPREHENSIBLE.  11 

scribed  in  as  plain  words  ;  that  it  is  the 
writer's  fault  if  what  he  says  is  not  clear." 

Then  do  not  neglect  to  read  upon  this  sub- 
ject, under  the  impression  that  you  never 
can  know  anything  about  it.  You  niay  un- 
derstand it  sufficiently  well  for  all  practical 
purposes,  if  you  will.  Think  for  yourself. 
Weigh  with  an  unbiased  judgment  the  state- 
ments and  arguments  which  you  read  and 
hear. 

The  subject  of  money  doubtless,  is  one  that 
men  of  common  mind  and  common  educa- 
tion can  comprehend.  The  terms  used  are 
familiar.  They  are  not  Greek  and  Latin,  like 
those  employed  largely  in  treating  of  medi- 
cine. The  subject  is  as  easy  to  compre- 
hend as  almost  any  other  subject  of  equal 
importance. 


CHAPTER  II. 

IMPORTANCE   OF   THE  SUBJECT. 

to  enlightened  countries,  money  is  the 
f  creature  of  the  government.  Then  the  law- 
making power  should  understand  the  j)rin- 
ciples  by  which  it  should  be  created  and 
regulated.  In  this  country  the  power  to 
make  and  execute  the  laws  rests  ultimately 
with  the  people.  If  the  civil  officers  of  one 
term  act  contrary  to  the  wishes  of  the  people, 
then,  at  the  first  opportunity,  they  select 
those  who,  they  believe,  can  be  relied  upon 
to  carry  out  their  wishes.  It  is  important 
then  that  the  people  should  have  correct 
views  upon  this  subject. 

In  our  present  civilization  the  money  in- 
terest affects  every  other  interest,  industrial, 
educational  and  religious.  It  is  only  a  few 
years  since  this  country,  with  every  element 
of  prosperity— 2:»eace  at  home  and  abroad, 
abundant  harvests,  and  general  health,  suf- 
lered  fi^m  a  great  prostration   of  business, 


ITS  IMPORTANCE.  13 

occasioned  by  an  unwise  administration  of 
our  national  finances.  Manufactories,  schools 
and  churches  were  closed;  and  thousands  of 
men,  educated  and  uneducated,  were  tramp- 
ing through  a  land  abounding  in  supplies  of 
food,  seeking  in  vain  for  a  place  where  they 
could  earn  their  daily  bread. 

It  is  said  that  this  paralysis  of  business 
was  the  necessary  result  of  a  great  war. 
But  France  carried  on  in  immediate  succes- 
sion a  foreign  war  and  a  civil  war,  and  not 
only  had  her  own  expenses  to  pay,  butalarge 
indemnity  to  pay  to  Germany;  yet  she  suf- 
fered no  such  prostration.  The  success  of 
her  financial  system  was  as  marked  as  the 
failure  of  her  armies. 

The  money  question  is  now  one  of  tlie 
great  questions  of  the  Nation.  The  natural 
resources  of  this  country  are  but  partially 
developed.  Yet  thousands  who  desire  to 
work,  are  out  of  employment,  because  of 
the  stagnation  of  business  produced  by  the 
unwise  administration  of  our  national  finan- 
ces. 

Every  home,  every  church  in  the  country, 
e,very  business,  every  benevolent  and  reli^ 


14  FIRST  LESSONS  ON  MONEY. 

ions  enterprise,  every  missionary  sent  from 
us  to  heathen  lands,  feels  the  effect  of  the 
monetary  measures  of  our  Government. 

If  these  measures  are  wise,  then  is  there 
general  prr)sperity, — ii  unwise,  there  is  de- 
pression and  discontent,  distress  and  degen- 
eration, and  the  wheels  of  progress  are 
checked,  or  move  backward. 

Says  Walter  Bagehot,  "A  good  system  of 
currency  will  benefit  the  country  and  a  bad 
system  will  hurt  it."  (Lombard  Street,  p.  22.) 

Under  our  financial  system,  as  adminis- 
tered, a  great  wrong  is  being  done  to  the 
many  for  the  benefit  of  the  few.  The  rich 
are  made  immensely  rich — those  in  moder- 
ate circumstances  are  reduced  to  poverty, 
and  the  poor  are  made  poorer. 

Yet  there  is  not  a  natural  element  of  pros- 
peiity  that  the  country  does  not  possess  in 
great  abundance.  The  distress  results  from 
artificial  causes.  The  remedy  is  with  the 
people. 

Politicians  cannot  be  trusted  to  take  the 
right  side  of  a  question,  until  the  people,  in 
large  and  increasing  numbers,  are  found 
upon  that  side. 


ITS  IMPORTANCE.  15 

Bad  management  of  the  finances  of  this 
country  have  cost  the  people  an  amount, 
which,  if  it  could  be  definitely  ascertained 
and  stated  in  figures,  would  seem  incredible. 
The  losses  from  the  failure  of  banks,  and 
from  the  depreciation  of  property  conse- 
quent upon  mismanagement  of  our  national 
finances,  have  been  enormous. 

There  is  no  reason  in  the  nature  of  things 
why  the  moneyed  institutions  of  a  country 
should  not  be  as  permanent  as  the  govern- 
ment itself.  Fluctuations  there  must  be, 
consequent  upon  the  variation  in  crops  and 
in  the  state  of  affairs  in  the  different  nations 
with  which  we  have  commercial  transactions; 
but  these  fluctuations  need  have  but  a  nar- 
row range.  From  year  to  year  there  should 
be  no  greater  difference  in  the  purchasing- 
power  of  a  dollar  than  that  which  arises 
from  natural  causes.  There  should  be  no 
prostration  of  business,  ao  general  distress 
growing  out  of  money  matters. 

If  a  system  of  national  finances  is  adopted 
that  shall  secure  permanent  prosperity,  as 
far  as  money  arrangements  can  do  it,  this  re- 


16  FIRST  LESSONS  ON  MONEY. 

suit  will  be  effected  in  answer  to  the  persist- 
ent demands  of  the  people. 

The  money  power  is  a  potent  factor  in  our 
politics.  It  controls  legislation  until  it  be- 
comes so  oppressive  that  the  people  rise  up 
against  its  control.  It  places  men,  simply 
because  they  are  rich,  in  official  positions  for 
which  they  are  totally  unfitted. 

But  the  intelligent  convictions  of  a  free 
people  are  stronger  than  the  money  power. 
"The  sober,  second  thought  of  a  people," 
said  Daniel  Webster,  "is  seldom  wrong  and 
always  efficient."  A  few  years  ago  the 
constitution  of  California  was  amended  in 
opposition  to  the  active  and  energetic  influ- 
ence of  the  banks,  the  railroads,  and  a  subsi- 
dized press.  It  was  a  spontaneous  uprising 
of  the  people  against  the  oppression  of  pow- 
erful moneyed  corporations. 

What  is  now  needed  is,  that  the  people  at 
large  of  the  United  States  emancipate  them- 
selves from  the  prejudices  that  have  been 
excited  and  fostered  among  them  by  the 
money  power,  and  give  to  this  question  their 
independent,  candid,  sober,  second  thought. 


CHAPTER    III. 

MONEY  NECESSARY.  , 

mHE  necessity  for  money  arises  out  of  the 
1  division  of  labor.  The  hermit  who  makes 
his  own  clothes,  and  shelter,  raises  his  own 
provisions,  travels  on  foot,  and  provides  his 
own  entertainment,  needs  no  money.  Even 
in  a  state  of  society  in  which  the  arts  flourish 
to  some  extent,  a  good  deal  of  trade  can  be 
carried  on  by  barter.  In  the  early  settle- 
ment of  this  country  those  who  began  in  the 
woods  made  maple  sugar  and  potash,,  and 
took  them  to  the  older  settlements,  and  ex- 
changed them  for  food  and  clothes.  This  is 
"the  natural  way  of  doing  business.  One 
man  exchanges  the  product  of  his  labor 
which  he  has  ih  excess  above  his  wants  for 
the  products  of  another  man's  labors  which 
he  has  in  excess  above  his  wants.  Thus 
something  of  real  value  is  exchanged  for 
something  of  real  value.  No  risks  are  run, 
no  loss  is  incurred. 


18  FIRST  LESSONS  ON  MONEY. 

But  the  disadvantages  of  this  system  of 
traffic  are  numerous. 

It  may  be  difficult  for  a  man  who  has 
something  to  sell  to  find  one  who  wishes  to 
buy  his  good?^  and  wiio  has  something  to 
dispose  of  which  he  wants.  "One  man, 
we  shall  suppose,  has  more  of  a  certain  com- 
modity than  he  himself  has  occasion  for, 
while  another  has  less.  The  former  conse- 
quently would  be  glad  to  dispose  of,  and 
the  latter  to  purchase,  a  part  of  this  super- 
fluity. But  if  this  latter  should  chance  to 
have  nothing  that  the  former  stands  in  need 
of,  no  exchange  can  be  made  between 
them."  (Adam  Smith's  Wealth  of  Nations, 
p.  17.) 

Then,  in  barter,  there  is  the  difficulty  of 
making  change.  A  man  who  has  a  horse 
to  sell,  and  wants  a  harness,  may  find  a  har- 
ness maker  who  wants  a  horse,  but  how  is 
the  difference  in  their  valu«  to  be  paid  ? 
Then  in  what  terms  shall  this  difference  in 
value  be  expressed  %  These  difficulties  led 
mankind  in  primtive  times  to  adopt  some- 
thing that  should  stand  both  as  a  measure 
and  a  representative  of  value.      At  an  early 


MONEY  NECESSARY.  19 

age  gold  and  silver  were  chosen.  Thus,  in  the 
days  of  Abraham,  silver  money  is  spoken  of 
as  the  well  known,  accepted  measure  of  val- 
ue, and  medium  of  exchange.  "Entreat  for 
me  to  Ephron,  the  son  of  Zohar,that  he  may 
give  nie  the  cave  of  Machpelah,  which  he 
hath,  which  is  in  the  end  of  his  field;  for  as 
much  money  as  it  is  worth:  he  shall  give  it 
me  for  a  possession  of  a  burying  place 
amongst  you.  And  Ephron  answered 
Abraham,  saying  unto  him,  My  Lord  heark- 
en unto  me:  the  land  is  worth  four  hundred 
shekels  of  silver;  what  is  that  betwixt  me 
and  thee  ?  bury,  therefore,  thy  dead.  And 
Abraham  weighed  to  Ephron  the  silver 
which  he  had  named  in  the  audience  of  the 
sons  of  Heth,  four  hundred  shekels  of  silver, 
current  money  with  the  merchant." — Gen. 
23:  9,  16,  16.  This  was  about^lSeo'years  be- 
fore Christ.  ~  So,  when  an'hundred  and  fifty 
years  later,  the  sons  of  Jacob  went  down  to 
Egypt  to  buy  corn  they  took  money  for  the 
purpose. 

At  present,  money  is  the  instrument  of 
commercial  transactions  among  all  the  tra- 
ding nations  of  the  earth.     But  it  is  only  an 


30  FIRST  LESSONS  ON  MONEY. 

instrument.  Its  value  depends  upon  the  fact 
that  there  are  those  who  may  be  reached 
who  will  accept  it  in  exchange  for  something 
tlat  is  useful.  The  solitary  survivor  of  a 
.^Mp wreck,  on  an  uninhabited,  unknown  is- 
land, who  saved  a  keg  of  gold  coin  from  the 
V-'  eck,  would  have  been  richer  by  far,  if  it 
had  been  a  keg  of  nails. 

"Money  is  a  machinery  for  doing  quickly 
and  commodiously  what  would  be  done, 
though  less  quickly  and  commodiously, 
without  it;  and,  like  many  other  kinds  of 
machinery,  it  exerts  a  distinct  and  independ- 
ent influence  of  its  own  only  when  it  gets  out 
of  order."  (Mr.  Mill,  as  quoted  by  Prof. 
Walker,  in  Money,  p.  4.) 

(ribbon  says  the  early  Germans  "prized 
their  rude  earthen  vessels  as  of  equal  value 
with  the  silver  vases,  the  presents  of  Rome 
to  their  princes  and  ambassadors.  The  value 
of  money  has  been  settled  by  general  con- 
sent to  express  our  wants  and  our  property, 
as  letters  were  invented  to  express  our  ideas; 
and  both  these  institutions,  by  giving  a  more 
active  energy  to  the  powers  and  passions 
of  human  nature,  have  contributed  to  mul- 


MONEY  NECESSARY.  21 

tiply  the  objects  they  were  designed  to  rep- 
resent. The  nse  of  gold  and  silver  is  in  a 
great  measure  factitious;  but  it  would  be 
impossible  to  enumerate  the  important  and 
various  services  which  agriculture,  and  all 
the  arts,  have  received  from  iron,  v/hen  tem- 
pered and  fashioned  by  the  operation  of  fire 
and  the  dexterous  hand  of  man.  Money,  in 
a  word,  is  the  most  universal  incitement, 
iron  is  the  most  powerful  instrument,  of  hu- 
man industry;  and  it  is  very  difficult  to  con- 
ceive by  what  means  a  people  neither  actua- 
ted by  the  one  nor  seconded  by  the  other, 
could  emerge  from  the  grossest  barbarism." 
(Rome,  V.  1,  Chap.  9,  p.  260.) 

But  as  the  methods  of  doing  business 
are  improved,  a  system  something  like 
the  original  one  of  barter,  but  without  its 
inconveniences  is  adopted.  Thus  a  Liver- 
pool grain  merchant  buys  a  cargo  of  wheat 
in  I»Jew  "i  ork.  About  the  same  time  a  hard- 
ware merchant  of  New  York  buys  a  quanti- 
ty of  cutlery  at  Sheffield.  Instead  of  incurr- 
ing the  risk  and  expense  of  conveying  money 
from  Liverpool  to  New  York  to  pay  for  the 
grain,  and  from  New  Y^ork  back  to  Sheffield 


22  FIRST  LESSONS  ON  MONEY. 

to  pay  for  the  cutlery,  the  Liverpool  mer- 
chant gives  for  his  grain  a  draft  on  the  Bank 
of  England  which  the  New  York  merchant 
buys  and  sends  to  pay  his  bills  at  Sheffield 
So  between  the  two  countries  only  the  bal- 
ance of  the  accounts  actually  passes  in  money. 
In  the  great  money  transactions  of  the  day, 
owing  to  a  carefully  devised  system  of  ex- 
changes, but  a  small  portion  of  the  money 
which  enters  into  the  calculations  is  actually 
paid.  Still,  money  is  at  the  bottom  of  these 
operations,  and  in  the  present  state  of  things 
is  as  necessary  to  trade  and  commerce  as  are 
ships  and  railroads.  We  should  find  it  diffi- 
cult to  transact  the  ordinary  business  of 
every  day  life  without  money. 


CHAPTER  IV. 

WHAT  IS  MONEY. 

^HERE  is  a  good  deal  of  literature  on  the 
7  subject  of  money.  But  the  writers  on  this 
subject  seem  cautious  about  defining  the 
word  money.  It  is  difficult  to  give  a  defini- 
tion that  will  stand  criticism.  Perhaps  it  is 
sufficient  for  practical  purposes  to  say  that 
money  is  an  article  that  will  be  taken  in  the 
final  payment  of  debts,  and  that  will  pur- 
chase whatever  is  for  sale  in  the  market. 

Prof.  Jevons  says,  "Much  ingenuity  has 
been  spent  upon  attempts  to  define  the  term 
MONEY,  and  puzzling  questions  have  arisen 
as  to  the  precise  kind  of  credit  documents 
which  are  to  be  included  under  the  term. 
Standard  legal-tender  coin  of  full  weight  is 
undoubtedly  money,  and  as  convertible  legal 
tender  bank-notes  are  exactly  equivalent  to 
the  coined  money  for  which  they  may  at 
any  moment  be  exchanged,  it  has  often 
been  considered  that  these  also  may  be  in- 


24  FIRST  LESSONH  ON  MONEY. 

eluded.  But  inconvertible  notes  are  often 
made  legal  tender  by  law,  and  can  discharge 
in  inland  trade  all  tlie  functions  of  money. 
Are  they  not  then  to  be  included  V  (Money 
and  Mechanism  of  Exchange,  248.) 

Prof.  Walker,  (Money,  Trade  and  Indus- 
try, p.  4),  says: 

"Money  is  that  which  passes  freely  from 
hand  to  hand  throughout  the  community  in 
final  discharge  of  debts  and  full  payment 
for  commodities,  being  accepted  equally  with- 
out reference  to  the  character  or  credit  of  the 
person  who  offers  it,  and  without  the  inten- 
tion of  the  person  who  receives  it,  to  consume 
it,  or  enjoy  it,  or  apply  it  to  any  other  use 
than  in  turn  to  tender  it  to  others  in  dis- 
charge of  debts  or  payment  for  commodi- 
ties." 

Dr.   Ely,   of  Johns  Hopkins    University, 

says: 

''That  object  is  money  in  the  legal  sense 
which  is  used  as  money  in  any  case  in  which 
the  use  of  money  is  legally  regulated;  or 
whatever  is  legal  tender  is  money  in  the 
legal  sense." 

Prof.  Jpvons,  witli  whom  in  the  main,  oth- 


WHAT  IS  MONEY  ?  35 

er   writers   on   money   agree,  describes    the 
functions  of  money  as  four: 

1.  It  serves  as  a  medium  of  exchange. 
The  farmer  sells  his  wheat  for  money.  With 
his  money  he  buys  tools,  clothes,-  groceries, 
books,  whatever  he  wants.  "Money"  says 
Adam  Smith,  "has  become,  in  all  civilized 
nations,  the  universal  instrument  of  com- 
merce, by  the  intervention  of  which  goods 
of  all  kinds  are  bought  and  sold,  or  ex- 
changed for  one  another."  (Wealth  of  Na- 
tions, p.  21.) 

2.  It  is  used  as  a  common  measure  of 
value.  Instead  of  comparing  the  value  of 
one  article  with  another  we  express  their 
value  in  money.  We  do  not  say  that  a 
horse  is  worth  twenty  sheep;  but  we  say  of 
a  horse  that  he  is  worth  a  hundred  dollars, 
and  of  a  sheep  that  it  is  worth  five  dollars. 

3.  Money  serves  as  a  standard  of  value. 
A  farmer  going  into  a  new  neighborhood 
wants  twenty  bushels  of  wheat  to  live  on. 
He  expects  to  have  wheat  to  sell  in  the  fall. 
But  he  promises  to  pay — not  twenty  bushels 
of  wheat — but  twenty  dollars,  the  market 
value  of  the  wheat,  with  interest.      It  may 


26 


FIRST  LESSONS  ON  MONEY. 


be  that  fifteen  bushels  of  wheat  will  pay  the 
debt— it  may  take    thirty.      A    bushel  of 
wheat  will  make  no  more  bread  at  one  time 
than  it  will  at  another.      Yet  it  may  take 
more  labor  to  raise  a  bushel  of  wheat  one 
year  than  it  does  another.      If  this  is  the 
case  generally,  then,   it  being   scarcer,  the 
price  is  higher.     A  bushel  of  wheat  in  a  bad 
season  represents  a  greater  quantity  of  la- 
bor than  it  does  in  a  good  season.      Though 
money  is  nominally  the  standard  of  value, 
yet  labor,  the  source  of  wealth,  is  the  real 
standard.      "At  all  times  and  places,"  says 
Adam  Smith,    "that  is  dear  which  is  diifi- 
cult  to  come  at,  or  which  it  costs  much  la- 
bor to  acquire;  and  that  cheap  which  is  to 
be  had  easily,  or  with  very  little  labor.     La- 
bor   alone,    therefore,   never  varying  in  its 
own  vahie,  is  alone   the  ultimate  and  real 
standard  by  which  the  value  of  all  commo- 
dities can  at  all  times  and  pla'-es  be  estima- 
ted and  compared.      It  is  their  real  price; 
money  is  their  nominal  price  only."  (Wealth 
of  Nations,  p.  25.) 

4.     Money  serves  as  a  store  of  value.      A 
man  cannot  move  his  farm  from  New  York 


WHAT  IS  MONEY  ?  27 

to  Illinois,  but  he  can  pnt  its  value  in  money, 
in  a  small  bulk,  so  as  easily  to  transport  it 
and  with  it  buy  another  wherever  he  chooses. 
"At  times,"  says  Prof.   Jevons,     "a  person 
needs   to   condense   his   propeity   into    the 
smallest  compass,  so   that  he  may  hoard  it 
away  for  a  time,  or  carry  it  with   him  on  a 
long   journey,  or   transmit   to  a  friend  in  a 
disrant  country.      Something  which  is  very 
valuable,  although  of  little  bulk  and  weight, 
and  which  will  be  recognized  as  very  valua- 
ble in  every  part  of  the  world,  is  necessary 
for  this  purpose.      The  current  money  of  a 
country   is    perhaps   more   likely   to   fulfil 
these  conditions  than  anything  else,  although 
diamonds  and  other  precious  stones  and  ar- 
ticles of  exceptional  beauty  and  rarity  might 
occasionally    be    employed."     (Money  and 
Mechanism  of  Exchange,  p.  15.) 


CHAPTER  V. 

MATERIAL  OF  MONEY.. 

N  new  and  partly  civilized  countries  differ- 
ent materials  have  been  used  as  money. 
"In  the  rude  ages,"  says  Adam  Smith, 
"cattle  are  said  to  have  been  the  common 
instruments  of  commerce;  and,  though  they 
must  have  been  a  most  inconvenient  one, 
yet  in  old  times  we  find  things  were  fre- 
quently valued  according  to  the  number  of 
cattle  which  had  been  given  in  exchange  for 
them."  (Wealth  of  Nations,  p.  17,  18.  A. 
D.  1776.)  "The  armour  of  Diomede,"  says 
Homer,  "cost  only  nine  oxen  ;  but  that  of 
Glaucus  cost  an  hundred  oxen.  Salt  is  said 
to  be  the  common  instrument  of  commerce 
and  exchanges  in  Abyssinia;  a  species  of 
shells  in  some  parts  of  the  coast  of  India; 
dried  cod  at  Newfoundland;  tobacco  in  Vir- 
ginia; sugar  in  some  of  our  West  Indian 
colonies;  hides  or  dressed  leather  in  some 
other  countries;  and  there  is  at  this  day  a 


MATERIAL  OF  MONEY.  29 

village  in  Scotland  where  it  it  is  not  uncom- 
mon, I  am  told,  for  a  workman  to  carry 
nails  instead  of  money  to  the  baker  shop  or 
the  ale  house." 

Furs  and  skins  were  used  as  money  by 
many  ancient  nations,  and  recently  by 
traders  with  our  North  American  Indians. 
"  Leather  money  is  said  to  have  circulated 
in  Russia  as  late  as  the  reign  of  Peter  the 
Great,  and  it  is  worthy  of  notice,  that  classic- 
al writers  have  recorded  traditions  to  the  ef- 
fect that  the  earliest  currency  used  at  Rome, 
Lacedaemon  and  Carthage,  was  formed  of 
leather."  (Money  and  Mechanism  of  Ex- 
change, p.  20.) 

It  is  probable  that  this  leather  money  was 
representative  or  token  money.  The  figure 
of  an  ox  was  stamped  on  leather,  and  the 
Shepherd  prince  who  issued  it  held  himself 
ready  to  give  an  ox,  on  demand,  to  the  per- 
son who  owned  this  piece  of  leather.  Hence, 
the  woi'di  pecunia,  from  p ecus,  cattle,  meant 
money.  From  this  word  is  derived  our  word, 
pecuniary,  relating  to  money.  As  cattle 
were  reckoned  by  the  head,  capitale,  in 
Latin,  the  word  capital  came  to  mean  one' s 


30 


FIRST  LESSONS  ON  MONEY. 


stock  in  trade.  So  the  word  stock  is  used 
to  denote  either  the  domestic  animals  on  a 
farm,  or  the  shares  in  an  organized  company, 
or  in  the  funded  debt  of  a  Government. 

Stock  is  said  to  be  "watered"  when  the 
stock  which  represents  a  certain  property  is 
arbitrarily  raised  in  amount.  Thus,  when 
for  a  railroad  which  cost  thirty  millions, 
stock  to  the  amount  of  sixty  millions  was 
issued,  the  stock  was  said  to  be  "watered." 
The  expression  originated  with  a  Wall  street 
broker  who,  before  the  days  of  railroads, 
drove  cattle  to  New  York.  Dishonest  dro- 
vers would  stop  a  few  miles  out  of  the  city 
and  salt  their  cattle  and  thus  cause  them  to 
drink  a  large  quantity  of  water  before  they 
were  weighed. 

If  the  people  generally  will  take  any  thing 
in  payment  of  debts  or  in  exchange  for  what 
they  have  to  sell  it  answers  the  purpose  of 
money.  "It  is,"  says  Prof  Walker,  "the 
disposition,  or  the  indisposition,  of  the  great 
majority  of  the  community  to  receive  it  in 
payment  which  settles  the  question  whether 
a  particular  commodity  shall  become  money 
or  not.     The  carved  pebbles  formerly  used 


MATERIAL  OF  MONEY.  31 

by  the  Ethiopians,  the  wampum  which  cir- 
culated between  the  New  England  colonists 
and  the  natives,  the  glass  beads  used  in 
small  payments  even  down  to  this  day  along 
the  Arabian  gulf,  the  shells  and  the  red 
feathers  employed  throughout  the  islands 
of  the  Indian  ocean,  were  good  money, 
though  serving  no  other  purpose  but  orna- 
ment and  decoration,  they  were  desired  by 
the  community  in  general;  men  would  give 
for  them  the  fruits  of  their  labor,  knowing 
that  with  them  they  could  obtain  most  con- 
veniently in  turn,  in  form  and  amount,  the 
fruits  of  the  labor  of  others. 

"It  is  in  view  of  its  general  or  universal 
acceptability  that  certain  writers  speak  of 
money  as  a  pledge  or  security  for  whatever 
the  holder  may  wish,  now  or  at  a  future 
time  to  obtain. 

"Thus  Aristotle,  in  the  '  Nicomachian 
Ethics,'  says:  "With  regard  to  a  future  ex- 
change (if  we  want  nothing  at  present)  money 
is,  as  it  were  our  security. 

"Mr.  McLeod,  in  the  same  connection, 
quotes  as  follows: 

"Boudeau:  'It,'  money,  'is  a  kind  of  bill 


32  FIRST  LESSONS  ON  MONEY. 

of  exchange,  or  payable  at  the  will  of  the 
bearer. ' 

"Adam  Smith:  'A  guinea  may  be  con- 
sidered as  a  bill  for  a  certain  quantity  of 
necessaries  or  conveniences,  upon  all  the 
tradesmen  of  the  neighborhood.' 

"Thornton:  'Money  of  every  kind  is  an  or- 
der for  goods.'  "     (Money,  p.  26,  26.) 

In  modern  times,  most  commercial  nations, 
civilized  and  semi-civilized,  are  agreed  in 
taking  gold  and  silver  as  money. 

There  are  good  reasons  for  this  choice  of 
these  two  metals  above  all  others  as  tJie  ma- 
terial from  which  to  coin  money. 

1.  They  have  a  high  market  value  as 
bullion  among  all  trading  nations.  For  ac- 
tual use  in  daily  life  neither  of  them  has  the 
intrinsic  value  of  iron.  They  are  not  neces- 
sary, as  material,  for  the  construction  of 
railroads,  or  for  the  making  of  farm  or  do- 
mestic implements,  or  machinery  for  factor- 
ies. Gold  and  silver  are  used  for  works  of 
ornament:  iron  is  a  necessity.  But  both 
gold  and  silver  have  a  much  higher  market 
value  than  iron,  and  on  that  account,  if  no 
other,  are  a  much  more  suitable  material  for 


MATERIAL  OF  MONEY.  33 

money.  Witli  iron  at  four  cents  a  pound  it 
would  take  one  hundred  and  twenty-five 
wagon  loads  of  a  ton  each  to  buy  a  farm 
worth  ten  thousand  dollars. 

2.  They  are  sufficiently  plenty  to  furnish 
material  for  money  and  yet  sufficiently 
scarce  'and  difficult  to  obtain,  to  prevent 
their  greatly  depreciating  in  value  by  becom- 
ing too  plenty. 

3.  Gold  and  silver  coin  will  bear  a  good 
degree  of  use  in  circulation  without  being  so 
worn  by  attrition  as  to  lose  their  weight  to 
that  extent  that  the  people  will  be  reluctant 
to  receive  them  as  money.  The  softer  met- 
als would  sooner  wear  out. 

4.  They  are  the  most  beautiful  and  at- 
tractive of  all  the  metals.  These  are  doubt- 
less among  the  reasons  why,  by  the  nations 
generally,  gold  and  silver  are  employed  as 
materials  for  coining  money. 

Other  metals  may  hereafter  come  into 
use. 


CHAPTER  VI. 

GOLD   AND   SILVER. 

f'  HERE  is  especially  in  England  and  Ger- 
many a  movement,  of  modern  origin,  to 
throw  silver  out  of  circulation  as  money.  This 
movement  is  doubtless  made  in  the  interest  of 
those  to  whom  large  sums  of  money  are  due. 
It  is  the  fashion  for  individuals,  corpora- 
tions, municipalities  and  nations  to  go  into 
debt.  The  national  debt  of  Great  Britain 
was  stated  to  be  in  1884,  ,$3,732,149,820;  that 
of  Germany,  $102,750,000;  of  France,  $3,- 
930,584,845;  of  the  United  States  $1,830,- 
528,923.  Besides  this  National  Debt  many 
of  our  States  are  owing  large  sums.  Then 
nearly  every  city  and  village  is  in  debt. 
Many  of  the  rural  towns  are  bonded,  and 
many  farms  are  mortgaged. 

The  most  of  this  indebtedness  is  owing  to 
our  citizens.  This  is  also  true  of  Great 
Britain  and  France  and  Germany.  This 
mnlses   n  Inro-e   creditor  clnss.      It   is   com- 


GOLD  AND  SILVER.  35 

posed,  for  the  most  part,  of  intelligent,  far 
sighted  members  of  community.  Naturally 
they  are  anxious  that  their  money  should 
make  as  much  more  money  as  it  honestly 
can. 

In  proportion  to  the  scarcity  of  money 
the  greater  is  its  purchasing  power.  When 
money  is  plenty  the  price  of  labor  and  of 
property  is  high.  When  money  is  scarce 
the  price  of  labor  and  of  property  is  corres- 
pondingly low.  The  less  money  there  is 
the  greater  is  the  purchasing  power  of  a  dol- 
lar. 

For  this  reason  the  large  creditor  class  is 
in  favor  of  contracting  the  currency,  because 
it  would  enliance  their  wealth.  This  is  the 
reason  why  silver  was  demonetized  in  Ger- 
many and  in  Great  Britain.  It  is  the  reason 
why  the  war  against  it  is  waged  so  persist- 
ently in  this  country.  It  is  for  the  interest 
of  those  to  whom  debts  are  owing  to  have 
monej'^  scarce. 

Mr.  Seyd  estimates  that  the  stock  of  gold- 
and  silver  now  current  as  coin,  or  existing  as 
bullion,  is  6,750  millions  of  dollars,  of  which 
3,250  millions  is  in  silver. 


36  FIRST  LESSONS  ON  MONEY. 

If  silver  is  generally  demonetized  tliat  will 
nearly  double  the  value  of  debts.  A  dollar 
would  then  represent  nearly  twice  the 
amount  of  labor  and  property  that  it  does 
at  present.  To  pay  the  debts  of  local  and 
national  governments,  taxation  would  have  to 
be  greatly  increased,  while  the  ability  to  pay 
taxes  would  be  proportionally  diminished. 
The  scheme  is  an  ingenious,  inhuman  one 
to  rob,  under  the  forms  of  the  law,  for  the 
benefit  of  capitalists,  the  people  who  must 
pay  the  public  debts. 

In  England,  silver  was  legal  tender  down 
to  the  year  1816.  The  public  debt  had  become 
great,  and  at  that  time  the  influence  of  the 
creditors,  who  were  the  capitalists  of  Eng- 
land, became  strikijigly  apparent.  Parlia- 
ment decreed  that  gold  should  be  legal- 
tender  in  all  payments  of  more  than  forty 
shillings. 

In  Germany  gold  alone  is  uMlimited  legal 
tender,  silver  being  a  legal  tender  only  to  a 
small  amount. 

In  1873,  the  Congress  of  the  United  States, 
either  through  ignorance,  or  corruption, 
passed  an  act  demonetizing  silver.    It  is  said 


GOLD  AND  SILVER.  37 

tliat  the  President  who  signed  the  bill,  did 
not  understand  its  import.  The  belief  is 
general  that  it  was  passed  through  the  man- 
agement of  the  bondholders  to  multiply  the 
value  of  their  bonds.  In  consequence  of  this 
Act,  and  of  calling  in  greenbacks,  to  a  large 
amount,  there  was  great  distress  throughout 
the  country.  Manufacturing,  to  a  great  ex- 
tent, was  suspended,  workmen  could  not  ob- 
tain employment,  and  in  the  midst  of  x)lenty, 
people  were  dying  of  starvation.  Thousands 
who  had  been  in  affluent  circumstances  were 
suddenly  reduced  to  poverty.  Property 
mortgaged  for  one  fourth  its  value  when  the 
debt  was  made,  would  not  sell  for  enough 
to  pay  the  mortgage.  Able  bodied  men,  by 
thousands,  tramped  through  the  land,  seek- 
ing m  vain  for  work.  At  length  silver  was, 
by  act  of  Congress,  again  made  legal  tender, 
money  became  more  plenty,  and  business 
began  to  revive. 

But  avarice  is  clamorous.  At  its  bidding 
renewed  efforts  are  being  made  to  degrade 
silver  by  stopping  its  coinage.  In  violation 
of  the  plain  provisions  of  the  law,  the 
Treasury  Department  refuses  to  use  silver 


38 


FIRST  LESSONS  ON  MONEY. 


in  payment  of  the  public  debt.  At  tlie  dic- 
tation of  the  bondholders  sold  alone  is  used 
for  this  purpose.  The  financial  policy 
of  the  Government  under  the  new,  as  under 
the  old  administrati  on  is  the  same  in  disregai  d- 
ing  alike  the  interests  of  the  people,  and 
their  will  as  expressed  by  the  LaAvs  of  the 
United  States. 

William  of  Normandy,  with  only  sixty 
thousand  disciplined  soldiers,  conquered 
England  full  of  valiant  men.  But  the  Eng 
lish  leader,  King  Harold,  was  slain  in  the 
first  battle,  the  army  disorganized  and  there 
was  nothing  left  for  the  undisciplined  masses 
but  submission.  The  bankers  and  bondhold- 
ers of  this  country  are  comparatively,  but  a 
small  body,  but  they  are  organized  and  dis- 
ciplined, and  they  control,  on  money  matters, 
the  two  great  parties  of  the  country,  and 
over-ride  the  interests  of  the  people.  They 
make  their  influence  felt  by  every  Depart- 
ment of  the  Government.  Our  law-makers, 
and  our  judicial  and  executive  officers  are 
elected  by  the  people.  The  farmers,  unor- 
ganized and  undisciplined,  are  ovei-powered 


X  GOLD  AND  SILVER.  39 

by  the  money  lenders  though  they  greatly 
out-number  them. 

Men  are  blinded  by  th*ir  own  interests. 
Those  who  have  fixed  incomes  find  plausible 
reasons  for  diminishing  the  volume  of  cur- 
rency in  circulation.  But  no  one  will  confess 
that  he  aims  at  this.  Yet  this,  says  ex-Senator 
Hill/ 'was  the  avowed  object  of  the  persons  who, 
under  the  head  of  Chevalier,  originated,  thirty 
years  ago,  the  plan  of  employing  one  and  the 
same  metal  in  all  commercial  countries.  They 
at  first  proposed  that  this  metal  should  be  sil- 
ver, and  they  actually  persuaded  some  Euro- 
pean countries  to  demonetize  gold.  They 
soon,  however,  changed  their  tactics,  and  pro- 
posed the  demonetization  of  silver  as  a  more 
practical  method  of  accomplishing  the  object 
of  'abridging  the  quantity  of  the  circulating 
medium.'"    (N.  A.  Quarterly,  Nov.,  1885.) 


CHAPTER  VIT. 

_  SILVER. 

iOME  recent  writers  on  money,  take  the 
(^  l^osition  that  gold  should  be  the  only 
money  of  nnlimited  legal  tender  .This  posi- 
tion is  wrong. 

That  silver,  as  well  as  gold,  should  be  nsed 
as  material  for  money,  is  evident  from  many 
consideiations. 

1.  There  is  not  enough  gold  and  silver 
together  to  form  the  necessary  medium  of 
exchange  in  the  commeicial  world.    . 

Said  Alexander  Hamilton,  the  great  finan- 
cier of  Washington's  administration:  "To 
annul  the  use  of  either  of  the  metals  as  money 
is  to  abridge  the  quantity  of  circulating  me- 
dium, and  is  liable  to  all  the  objections  which 
arise  from  a  comparison  of  the  benefits  of  a 
full,  with  the  evils  of  a  scanty  circulation." 
(Report  on  the  Mint.)  This  observation  has 
far  greater  weight  now  than  it  had  when  it 
was  lunde;  for  the  rloninnrl  for  monov  ha''  in- 


SILVER.  41 

creasecl  in  greater  proportion  than  the  quan- 
tity of  gold  and  silver  in  circulation  has  in- 
creased, notwithstanding  the  large  quantities 
of  both  which  have  been  mined  within  the 
last  lialf  century.  Trading  nations  aie  still 
obliged  to  use  a  large  amount  of  paper  money. 

2.  Silver  has  been  used  as  money  from  the 
earliest  historic  ages.  In  fact,  its  use  from 
the  remotest  antiquity  has  been  more  general 
than  the  use  of  gold  for  money.  The  first 
mention  in  history  of  money  is  of  silver,  in 
the  transaction  of  Abraham,  to  which  refer- 
ence has  already  been  made. 

Herodotus  is  the  oldest  of  the  ancient, pro- 
fane historians  whose  works  have  come  down 
to  us.  He  flourished  about  450  years  before 
Christ.  In  speaking  of  the  great  pyramid 
of  Egypt,  he  says,  ''On  the  pyramid  is  shown 
an  inscription,  in  Egyptian  characters,  how 
much  was  expended  in  ladishes,  onions  and 
garlic  for  the  workmen;  which  the  inter- 
preter, as  I  well  remember,  reading  the  in- 
scription, told  me  amounted  to  one  thousand 
six  hundred  talents  of  silver."  (Carys  He- 
rodotus, p.  145.) 

Assyria  was  one  of  the  oldest  of  nations 


43  FIRST  LESSONS  ON  MONEY. 

Its  history  has  come  down  to  us  inscribed  in 
Cuneiform  characters  on  tablets  of  clay, 
many  of  wWch  have  recently  been  discov- 
ered. In  a  history  compiled  from  these 
monuments,  Dr.  Smith  says,  "A  husband 
had  the  power  of  divorcing  his  wife  on  pay 
ment  of  half  a  manch  of  silver,"  (History  ol 
Assyria,  p.  14. )  This  shows  that  silver  was 
used  as  money  by  that  ancient  nation,  prob- 
ably as  long  ago  as  1120  years  before  Christ. 

A  metal  which  has  commended  itself  to 
mankind  as  suitable  material  for  money  for 
over  three  thousand  seven  hundred  years 
should  not  be  set  aside  for  the  unworthy 
purpose  of  making  heavier  the  burdens  of 
debtors. 

3.  Ot  the  two  metals,  silver  is  less  liable 
than  gold  to  large  fluctuations  in  value 
through  a  long  period  of  time.  The  market 
value  of  articles  of  commerce  depends  largely 
upon  the  amount  of  labor  required  to  pro 
duce  them.  There  is  far  less  variation  la 
theamount  of  labor  and  capital  required  to 
obtain  from  the  mine  a  given  amount  of  sil- 
ver than  there  is  to  obtain  a  given  aipo^tot 
of  gold.     Silver  is  found,  almost  entirely  in 


SILVER.  43 

the  form  of  ore,  combined  with  other  metalt^. 
It  must  be  dag,  and  smelted,  and  sep:i rated 
from  all  other  substances.  To  do  this  al- 
ways requires  labor,  and  skill,  and  capital. 
Gold  is  often  found  in  lai-oe  quantities,  in 
the  form  of  dust  or  flakes,  or  nn<rgets,  in  its 
pure  metallic  state,  mixed  in  with  ground 
or  sand,  from  which  it  is  easily  separated  by 
washing  in  water.  To  do  rliis  requires  no 
capital  but  phj^sical  strength,  no  machines, 
except  a  spade  and  a  pun  or  trougli.  In  this 
way  in  1853  gold  was  obtained  in  California 
to  the  value  of  $65, OOC, COO.  A  common  la- 
borer would  get  from  live  to  fifty  dollar^  a 
day.  Silver  is  never  mined  by  so  simple  and 
inexpensive  a  method.  When  these  suiface, 
placer  diggings,  are  exhausted,  then  gold  is 
obtained  by  getting, often  from  a  great  depth, 
the  rock  in  which  it  is  imbedded,  ciushing  it 
and  separating  the  gold  fiom  the  lock  and 
from  other  minerals.  This  requires  a  large 
capital  and  a  great  amount  of  labor. 

4,  Again  silver  is  better  than  gold  for 
money,  because  it  is  a  harder  metal,  and 
therefore  can  be  ciiculated  more  without 
losing  in  weight  and  value  by  abrasion. 


44  FIRST  LESSONS  ON  MONEY. 

For  the  same  reason  silver  is  more  useful 
for  domestic  purposes,  to  which  use  it  is  ap- 
plied to  a  greater  extent  the  more  abundant 
it  becomes. 

The  English,  in  demonetizing  silver,  are 
constantly  reproved  by  the  terms  they  use 
when  speaking  or  writing  of  money.  For 
their  common  denominations  of  money  imply 
a  silver  standard. 

Adam  Smith  says,  "There  were  silver  coins 
in  England  in  the  time  of  the  Saxons;  but 
there  was  little  gold  coined  till  the  time  of 
Edward  III.,  nor  any  copper  till  that  of 
James  I.  of  Great  Britain.  In  England, 
therefore,  and  for  the  same  reason,  I  believe, 
in  all  other  modern  nations  of  Europe,  all 
accounts  are  kept,  and  the  value  of  all  goods 
and  of  all  estates,  is  generally  computed  in 
silver,  and  when  we  mean  to  exjDress  the 
amount  of  a  person's  fortune,  we  seldom 
mention  the  number  of  guineas,  but  the 
number  of  -pounds  sterling  which  we  sup- 
pose would  be  given  for  it. 

"In  England  gold  was  not  considei-ed  as  a 
legal    tender  for  a  long  time  after  it  was 


SILVER.  45 

coined  into  money."     (Wealth   of  Nations, 
p.  30.) 

In  speaking  of  coins,  stamped  on  both 
sides,  he  says, 

"The  denomination  of  those  coins  seem 
originally  to  have  expressed  the  weight  or 
quantity  of  metal  contained  in  them. 

"The  English  pound  sterling  in  tb-  time 
of  Edward  I.  contained  a  pound,  Tower 
weight,  of  silver  of  a  known  lineness.  The 
Tower  pound  seems  to  have  been  something 
more  than  the  Roman  pound,  and  something 
less  than  the  Troyes  pound."  (Wealth  of 
Nations,  p.  20.) 

5.  The  value  of  money,  that  is,  its  pur- 
chasing power,  will  be  subject  to  less  varia- 
tion with  a  double  standard,than  if  gold  alone 
is  used  as  a  standard  of  value.  A  sudden 
shower  will  raise  the  water  in  a  mill  pond 
when  it  will  not  sensibly  affect  Lake  Erie. 
So  the  more  money  there  is  in  circula- 
tion the  less  will  its  value  be  affected  by 
some  temporary  variation  in  the  amount. 
The  sudden  discovery  of  a  rich  gold  mine  is 
not  usually  attended  by  the  discovery  of 
silver  at  the  same  time. 


46  FIRST  LESSONS  ON  MONEY. 

No  two  distinct  articles  of  commerce  will 
always  have  in  tlie  market  the  same  relative 
value.  Wheat  and  corn  are  in  this  country 
staple  articles.  It  costs,  in  general,  twice  the 
labor  to  produce  a  bushel  of  wheat  that  it 
does  to  produce  a  bushel  of  corn.  But  some- 
times a  bushel  of  corn  sells  for  as  much  as  a 
bushel  of  wheat.  But  that  is  no  reason  why 
a  restriction  should  be  placed  upon  the  rais- 
ing of  either  wheat  or  corn.  It  can  but  be 
in  the  nature  of  things  that  the  relative  value 
of  gold  and  silver  should  vary  at  times.  But 
this  is  no  reason  why  the  coinage  of  either 
into  money  should  be  stopped.  Yet  this  is 
the  only  reason  assigned  by  the  mono-metal- 
lists  for  their  bitter  warfare  upon  silver 
coinage  in  this  country. 

Grermany,  by  demonetizing  silver,  has 
greatly  increased  the  value  of  the  war  indem- 
nity which  the  French  are  compelled  to  pay 
it.  England  has  demonetized  silver  in  the  in- 
terests of  a  moneyed  aristocracy.  The  de- 
pressing effect  upon  the  common  people  is 
seen  in  the  large  numbers  that  emigrate  year- 
ly from  those  countries. 

In   conspqiiPTiPp    of  the  rlemono^'z'ih'oTi  of 


SILVER.  47 

silver  in  those  countries  its  marl^et  valne  as 
bullion  has  fallen.  So  we  are  often  told 
what  is  the  market  valne  of  our  silver  dollar, 
as  bvllion,  in  those  countries.  This  is  done 
to  excite  prejudice  against  it.  Why  are  we 
not  told  what  is  the  market  value  of  the 
nickel,  the  half  dime,  or  of  the  copper  in  the 
cent,  or  of  the  paper  on  which  the  bills  are 
printed  \ 

But  even  in  England  the  metal  in  their 
silver  or  cop])er  coins  has  not  the  market 
value,  as  bullion,  of  the  face  of  the  coin. 

Prof.  Jevons  says,  ''The  metal  contained 
in  a  token  coin  has  of  course  a  certain  value; 
but  it  may  be  less  than  the  legal  value  in 
almost  any  degree.  In  our  English  silver 
coinage  the  difference  is  from  nine  to  twelve 
per  cent,  according  to  the  market  price  of 
silver;  in  our  bronze  coinage  the  diffei-ence  is 
seventy-five  per  cent.  The  metal  contained 
in  the  French  bronze  coins,  is,  in  like  manner, 
equal  in  value  to  little  more  than  one  quarter 
of  the  current  value.  In  many  cases  the 
difference  has  been  far  greater  as  in  some  of 
the  old  kreutzer  pieces,  lately  current  in  the 
German  States,"     ("Money"  p.  74.) 


4S  FIRST  LESSONS  ON  MONEY. 

Though  the  relative  value  of  gold  and 
silver  to  each  other  may  vary  somewhat, 
from  age  to  age,  owing  to  the  difference  in 
supplies  of  each  of  these  metals,  and  toother 
causes,  yet  by  using  both  as  material  for 
money  a  closer  approximation  is  made  to  a 
permanent  and  fixed  measure  of  value  tlian 
would  be  the  case  by  using  one  to  the  exclu- 
sion of  the  other.  Heat  expands  different 
metals  in  different  degrees.  But  it  is  proved 
that  a  pendulum  composed  of  several  metals 
will  more  nearly  preserve  its  length  the  same 
in  all  weathers  than  one  will  composed  of 
any  one  metal. 

No  two  horses  can  be  found  of  precisely 
the  same  weight,  and  speed,  and  strength, 
and  power  of  endurance.  Yet  an  ordinary 
teamster  can  draw  a  greater  load  with  two 
good  horses  than  with  either  of  them  alone. 
Money,  in  this  commercial  age,  has  rail  roads 
and  steamboats  and  costly  machinery  to 
build,  enormous  purchases  to  make,  vast 
quantities  of  produce  to  transport,  expen- 
sive wars  to  carry  on,  and  debts  to  pay  of 
individuals  and  governments,  amounting  in 
the  aggregate   to   enormous   suras.     Never, 


SILVER.  4'.i 

in  any  period  of  the  world's  history,  was 
this  load  as  heavy  as  now;  and  it  would 
seem  the  height  of  madness  and  of  folly 
where  it  has  heretofore  taxed  the  strength 
of  the  two  to  pull  the  load,  to  turn  out  and 
dismiss  the  heavier,  steadier  and  stronger 
horse  of  the  two,  and  attempt  to  move  with 
a  one-horse  team  the  burden  which  the  com- 
mercial transactions  of  the  day  impose  on 
money. 

The  ratio  wiiich  the  market  value  of  gold 
and  silver  bear  to  each  other  varies  less  from 
age  to  age  than  really  might  be  expected. 

Herodotus,  speaking  of  the  tribute  that 
was  paid  to  Darius,  said  that  "gold  was  es- 
timated at  thirteen  times  the  value  of  silver." 
(History,  p.  212.) 

At  present  the  ratio  of  gold  to  silver,  as 
established  bylaw,  in  this  country,  is  16  to  1. 
In  France  it  is  15.5  to  1.  The  difference  be- 
tween their  relative  value  now  and  twenty- 
four  hundred  years  ago  is  not  sufficiently 
great  to  be  alarming. 

The  quantity  of  gold  and  silver  in  the 
markets  of  the  world  gradually  increases  as 
new   mines  are    discovered.     In   ten    years 


50  FIRST  LESSONS  ON  MONEY. 

after  the  discovery  of  gold  in  California,  in 
the  year  1848,  as  much  gold  was  produced 
as  had  been  in  the  previous  356  years. 

British  America  and  Australia  gave  large 
contributions  to  the  world's  store  of  the 
precious  metals. 

Commercial  nations  were  greatly  alarmed 
at  this  sudden  iiitlux  of  gold.  They  sup- 
posed that  it  would  suffer  a  great  deprecia- 
tion in  value.  Says  Piof.  Levi,  "Frightened, 
and  not  without  reason,  at  the  possible  con- 
sequences, some  countries,  heretofore  anx- 
ious to  attract  and  retain  gold  in  circulation, 
even  at  great  sacrifices,  showed  a  feverish 
anxiety  to  banish  it  altogether.  In  July, 
1850,  Holland  demonetized  the  gold  ten  dol- 
lar piece  and  the  Guillaume.  Portugal  pro- 
hibited any  gold  from  having  a  current  value, 
except  English  sovereigns.  Belgium  demon- 
etized its  gold  circulation,  Russia  prohibited 
the  export  of  silver;  and  France,  alarmed, 
but  less  hasty,  issued  a  commission  to  in- 
quire into  the  matter."  (Hist.  British  Com- 
merce, p.  336.) 

Yet  these  fearful  forebodings  were  not 
realized.     No   sensible    harm    has    resulted 


SILVER.  51 

from  the  great  quantities  of  gold  and  silver, 
which  in  modern  times  have  been  discovered 
and  put  upon  the  market.  There  are  enough 
poor  people  in  the  world,  who  can  use  for 
procuring  the  comforts  of  life  all  the  gold 
and  silver  which  they  can  obtain  by  honest 
industry. 

Both  should  be  kept  in  circulation.  The 
efforts  making  to  degrade  silver  do  not  ap- 
pear to  be  in  the  interests  of  humanity. 

Tlie  impression  is  sought  to  be  made  that 
silver  is  not  used  as  money  by  commercial 
nations  generally.  This  is  a  great  mistake. 
The  Bank  of^France  alone  holds  over  seven- 
teen millions  of  dollars  more  in  silver  than 
the  United  States  ever  coined.  The  people 
probably  hold  half  as  much  more.  Her  sil- 
ver is  a  full  legal  tender.  Yet  it  does  not 
drive  the  gold  out  of  the  country.  All  the 
continental  nations  of  Europe,  except  Gei*- 
many,  make  silver  a  legal  tender.  It  is  the 
money  chiefly  used  in  India,  Japan  and 
China. 

"  The  English  government,"  says  Prof. 
Jevons,  "has  repeatedly  tried  to  introduce  a 
gold  currency  into  our   Indian  possessions, 


52  FIRST  LESSONS  ON  MONEY. 

but  has  always  failed,  and  the  gold  coins 
now  circulaiing  there  are  supposed  not  to 
exceed  one  tenth  part  of  the  metallic  cur- 
rency. Although  the  pouring  out  of  forty 
or  fifty  millions  steiling  of  silver  from  Ger- 
m;iny  may  for  some  years  depress  the  price 
of  the  metal,  it  can  be  giadnally  absorbed 
without  difficulty  by  the  Kistein  nations, 
which  have  for  two  or  three  thousand  years 
received  a  continual  stream  of  the  precious 
metals  from  Europe.  If  other  nations  should 
one  after  another  demonetize  silver,  yet  the 
East  may  be  found  quite  able  to  absorb  all 
that  is  thrust  upon  it,  provided  that  this  be 
not  done  too  rapidly."  (Money,  p.  142.) 

Those  who  in  this  country  are  carrying  on 
the  war  against  the  farther  coinage  of  silver 
make  the  impression  that  silver  is  so  much 
more  plenty  than  gold  that  there  is  danger 
that  silver  will  supplant  gold,  and  that  our 
metallic  money  will  be  chiefly  silver.  This 
idea  is  often  presented,  and  many  have  come 
to  believe  that  it  is  true.  But  it  is  utterly 
false.  There  is  no  undue  proportion  of  sil- 
ver in  the  country. 

During  the  fiscal  year  ending   June   30th, 


SILVER.  53 

1885,  the  value  of  tlie  gold  deposited  at  the 
mints  and  assay  offices  of  the  United  States 
was  $.56,748,752.60.  Tlie  value  of  the  silver 
so  dei^osited  duiing  the  same  period  was 
$8«, 082, 222.87.  (Report  of  the  Director  of  the 
Mint,  p.  8,  4.) 

Here  we  see  that  the  excess  of  gold  over 
silver  brought  to  our  mints  the  last  year  was 
$18,606,529.73,  or  almost  50  pel-  cent. 

But  it  is  claimed  tluit,  becanse  England 
and  Giiimany  have  denionelized  silvei",  :md 
silver  has,  in  consequence  depreciated  some- 
what in  market  value  as  bullion,  that  "'the 
poorer  money  will  drive  out,  the  better," 
and  the  gold  be  carried  out  of  the  country, 
and  the  silver  from  those  countries  be 
brought  in  to  displace  it. 

But  this  is  also  disproved  by  the  facts. 
From  the  same  authority  we  learn  that  the 
imports  of  silver  into  the  United  States  were 
— for  the  fiscal  year  above  referred  to — of 
bullion  lo  the  valne  of  $4,530,384;  of  coin, 
$12,020;243,  of  which  *673,926  were  our  own 
coin.  This  mnkes  a  total  of  silver  imported 
for  the  year,  $16,550,627.  During  the  same 
period  gold  was  imported  to  the  value  of,  in 


5f  FIRST  LESSONS  ON  MONEY. 

bullion,  $11,221,846.45;  in  coin,  $17,842,459. 
Total,  $29,063,305.45.  (Ibid.)  So  that 
iiotwitlistandinojall  these  predictions,  there 
were  imported  into  the  country  during  the 
last  fiscal }'' ear,  $12,512,678.45  more  gold  than 
silver  ! 

But  this  does  not  x^'obably  represent  the 
whole  truth;  for  the  imports  of  silver  are 
given  from  the  books  of  the  Custom  houses 
— though  much  of  it  did  not  go  to  the  mints — 
but  only  that  amount  of  gold  imported  is 
given  above  which  was  deposited  at  the  mints 
and  assay  offices. 

The  exports  of  silver  for  the  same  period 
were  —  of  bullion  $20,422,  924— of  A^merican 
coin,  $1,211,627— Foreign  silver  coin,  $12,060,  - 
612.     Total  export  of  silver  $33,695,163. 

The  exports  of  gold  were,  of  bullion,  $395, 
750;  of  American  coin,  $2,345,809.  Foreign 
gold  coin,  $5,736,333.  Total  exports  of  gold; 
$8,477,892.  This  shows  that  the  value  of 
silver  exported  for  the  year  exceeded  the 
value  of  the  gold  exported  by  $25,216,671. 
This  shows  that  the  accumulation  of  gold 
over  silver  in  the  country  during  the  last 
fiscal  year  has  been  over  300  per  cent. 


SILVER.  55 

It  seems  incredible  that,  in  tlie  face  of 
these  facts,  intelligent  men  can  raise  such  a 
clamor  against  silver  coinage  ! 

Dwell  upon  these  figures  until  you  become 
familiar  with  the  true  story  which  they  tell. 
You  will  then  see  that  if  there  could  be  such 
a  thing,  we  should  be  in  much  more  danger 
of  a  glut  of  gold  than  of  silver. 

The  Director  of  the  Mint  estimates  the 
amount  of  coin  in  this  country,  July  1st, 
1885,  at  1820,000,000;  of  which,  $542,000,000 
consisted  of  gold  coin,  and  $278,000,000  of 
silver  coin.     (Ibid,  p.  27. ) 

It  is  objected  that  the  silver  does  not  go 
into  general  circulation. 

To  this  we  reply  that  there  is  more  silver 
in  circulation  among  the  people  than  there 
is  gold. 

"The  number  of  silver  dollars  coined  un- 
der the  provisons  of  the  act  of  February  28, 
1878,  amounted  to  $213,259,431  on  November 
1st,  1885,  of  which  $163,817,342  remained  in 
the  Treasury  of  the  United  States,  while 
$49,442,089  were  in  circulation  on  that  date." 
(Report  of  the  Comptroller  of  the  Currency, 
p.  18.) 


m  FIRST  LESSONS  ON  MONEY. 

Why  does  so  large  an  amount  of  silver  re- 
main in  the  Treasnij  ? 

II  is  simply  because  the  paper  which  rep- 
resents it  is  lighter  to  carry  and  easier  to 
count. 

The  next  paragraph  in  the  Eeport  says 
that  "Silver  certificates  have  been  issued, 
which  are  re]m>sented  by  standard  silver 
dollars  in  the  Treasury  of  the  United  States, 
to  the  amount  of  $125,053,286."  If  silver 
certificates  are  in  circulation  it  is  the  same 
as  if  the  silver  was  in  circulation.  Of  these 
certificates  $81,906,514  have,  in  the  course  of 
business  found  their  way  back  to  the  Tieas- 
ury. 

It  would  also  add  to  the  circulation  of  sil- 
ver if  the  Treasurer  would  use  the  silver  re- 
ceived for  duties,  to  pay  the  interest  and 
principal  on  United  States  Bonds,  as  he  is 
required  to  do  by  law. 

The  moneyd  power  hais  already  become  so 
strong  that  it  overrides  the  laws.  This  silver 
is  kept  hoarded  contrary  to  law,  and  the 
ofiicials  who  do  it,  complain  that  it  is  not  in 
circulation,  and  ask  to  have  silver  coinage 
stopped  on  that  account  ! 


SILVER.  57 

Remember  that,  accoidiiig  to  the  ofRcial 
reports  of  the  goveinment  there  was  during 
the  iast  fiscal  year. 

1.  More  gold  than  silvei-  brought  to  the 
mints  and  assay  offices  of  the  U.  S.  Govern- 
ment 

2.  More  gold  than  silver  imj)orfed  into 
thte  countiy. 

3.  More  silver  than  gold  exported  from 
the  country. 

So  that  relatively  over  three  hundred  per 
cent,  moie  gold  than  silver  was  in  the  year 
past  being  accumulated  in  this  country. 

'  In  the  light  of  these  facts  there  does  not 
seem  to  be  but  one  explanation  of  the  outcry 
made  against  silver  coinage  and  that  is  that 
this  outcry  is  made  in  the  interests  of  the 
bondholders  without  regard  to  the  welfare 
of  the  countr}'  as  a  whole. 


CHAPTER  VIII. 

PAPER   MONEY. 

^'HOUGH  gold  and  silver  be  both  used  as 
1  material  for  money,  yet  the  quantity  of 
those  vhich  any  commercial  nation  can  keep 
in  circulation  is  insufficient  to  meet  the 
demands  of  trade.  Hence  the  necessity  for 
paper  money.  In  commeicial  centers,  checks, 
bills  of  exchange,  and  other  representatives 
of  value,  are  made  to  do  the  work  of  money. 
In  the  Clearing  Houses  of  New  York  and 
London,  by  means  of  which  the  accounts 
between  banks  are  settled,  an  immense 
business  is  transacted  daily  with  the  use  of 
but  very  little  money.  Balances  only  are 
paid  and  they  generally  by  checks. 

Paper  is  Iso  used  as  a  substitute  for 
metallic  money  for  its  greater  convenience. 
To  carry  about  a  few  thousand  dollars  in 
gold  would  be  a  burden;  but  a  hundred,  five 
hundred,  or  thousand  dollar  bills  would  not 
be   inconvenient   to    carry,   and   tlie    same 


PAPER  MONEY.  59 

n mount  in  a  draft  would  not  be  noticed. 
Jlence,  no  matter  how  plenty  metallicmoney 
is,extensive  business  transactions  require  the 
use  of  paper  in  some  form  as  a  substitute. 

In  some  other  respects  paper  money  has 
the  .ndvantage  over  metallic.  Gold  andsilver 
suffer  abrasion  and  consequently  lose  in  value 
by  daily  use.  In  time,  this  money  becomes 
so  worn  and  light,  that  people  are  unwilling 
to  take  it,  and  difficulty,  and  sometimes 
great  national  distress  results. 

It  is  also  liable  to  mutilation  by  boring, 
and  sweating,  and  other  processes  by  which 
a  pait  of  the  metal  is  abstracted,  while  the 
coin  presents  the  appearance  of  being  simply 
worn  by  use.  In  England,  before  the  art  of 
coining  money  was  brought  to  its  present 
state  of  perfection,  their  coins  were  mutilated 
by  clippings  and  parings,  as  well  as  worn 
by  use,  until  the  current  money  lost  nearly 
half  its  value.  To  put  a  stop  to  mutilating 
the  coin,  the  severest  penalties  were  inflicted. 
Macaulay  says,  (History  of  England,  p.  87, 
et  seg.).  "It  is  to  no  purpose  that  the 
rigorous  laws  against  coining  and  clipping 
were  rigorously  executed.     At  every  session 


60  FIRST  LESSONS  ON  MONEY. 

that  was  held  at  the  Old  Baily,  terrible 
examples  were  made.  Hurdles,  with  four, 
five,  or  six  wretches  convicted  of  counter- 
feiting, or  mutilating  the  money  of  the  realm, 
were  dragged,  month  after  month,  up  Hol- 
born  Hill.  One  morning  seven  men  were 
hanged,  and  a  woman  burned  for  clipping. 
But  all  was  in  vain. 

"The  evil  proceeded  with  constantly  accel- 
erating velocity.  At  length  in  the  autumn 
of  1695  it  could  hardly  be  said  that  the  coun- 
try possessed,  for  practical  purposes,  any 
measure  of  the  value  of  commodities.  It 
was  a  mere  chance  whether  what  was  called 
a  shilling  was  really  ten  pence,  six  pence  or 
a  groat. 

""The  results  of  some  experiments  which 
were  tried  at  that  time,  deserve  to  be  men- 
tioned. 

"Three  eminent  London  goldsmiths  were 
invited  to  send  a  hundred  pounds  each  in 
current  silver  to  be  tried  by  the  balance. 
Three  hundred  pounds  ought  to  have  weighed 
about  twelve  hundred  ounces.  The  actual 
weight  proved  to  be  six  hundred  and  twenty - 
four  ounces. 


PAPER  MONEY.  61 

"The  evils  produced  by  this  state  of  the 
currency  were  not  such  as  have  generally 
been  thought  worthy  to  occupy  a  prominent 
place  in  history.  Yet  it  may  well  be  doubted 
whether  all  the  misery  which  had  been  in- 
flicted on  the  English  nation,  in  a  quarter  of 
a  century,  by  bad  kings,  bad  ministers,  bad 
parliaments,  and  bad  Judges,  was  equal  to  the 
misery  caused  in  a  single  year  by  bad  crowns 
and  bad  shillings.  Those  e^vents  which 
furnish  the  best  themes  for  pathetic  or 
indignant  eloquence  are  not  always  those 
'which  most  affect  the  happiness  of  the  great 
body  of  the  people.  The  misgovernment  of 
Charles  and*  James,  gross  as  it  had  been,  had 
not  prevented  the  common  business  of  life 
from  going  steadily  and  prosperously  on. 
While  the  honor  and  independence  of  the 
state  was  sold  to  a  foreign  power,  while 
chartered  rights  were  invaded,  while  funda- 
mental laws  were  violated,  hundreds  of  thou- 
sands of  quiet,  honest,  and  industrious 
families  labored  and  traded,  ate  their  meals 
and  lay  down  to  rest,  in  comfort  and  security. 

But  when  the  great  instrument  of  exchange 
became  thoroughly  deranged,  all  trades,  all 


62  FIRST  LESSONS  ON  MONEY. 

industries  were  smitten  as  with  a  palsy. 
The  evil  was  felt  daily  and  hoiirly  in  most 
every  class;  in  the  dairy  and  on  the  thresh- 
ing floor,  by  the  anvil  and  the  loom,  on  the 
billows  of  the  ocean, and  in  the  depths  of  the 
mine.  Nothing  could  be  purchased  without 
a  dispute.  Over  every  counter  there  was 
wrangling  from  morning  to  night.  The 
workman  and  his  employer  had  a  quarrel  as 
regularly  as  the  Saturday  came  around.  On 
a  fair  day,  or  a  market  day,  the  clamors, 
the  reproaches,  the  taunts,  the  curses  were 
incessant,  and  it  was  well  if  no  booth  was 
overturned  and  no  head  broken.  No  mer- 
chant would  contract  to  deliver  goods  with- 
out making  some  stipulation  about  the  qual- 
ity of  the  coin  in  which  he  was  to  be  paid. 
Even  men  of  business  were  often  bewildered 
by  the  confusion  into  which  all  pecuniaiy 
transactions  were  thrown.  The  simple  and 
the  careless  wei-e  pillaged  without  mercy  by 
extortioners  whose  demands  grew  even  more 
rapidly  than  the  money  shrank.  The  price 
of  the  necessaries  of  life  rose  fast.  The  la- 
borer found  that  the  bit  of  metal,  which, 
when  he  received  it,  was   called   a   shilling. 


PAPER  MONEY.  63 

would  hardly  when  he  wanted  to  purchase  a 
loaf  of  bread,  go  as  far  as  sixpence. 

Where  artisans  of  inore»tlian  usual  intelli- 
gence were  collected  in  great  numbers,  as  in 
the  dockyard  at  Chatham,  they  were  able  to 
make  their  complaints  lieaid  and  to  obtain 
some  redress.  But  the  ignorant  and  help- 
less peasant  was  cruelly  ground  between  one 
class  which  would  give  money  only  by  tale 
and  another  which  would  take  it  only  by 
weight. 

''To  remedy  these  evils  the  Recoinage  Act 
was  passed.  The  debased  coins  were  melted 
and  recoined  at  an  expencse  to  the  country 
of  one  million  two  hundred  thousand  pounds 
sterling." 

Coins  made  of  gold  and  silver,  durable  as 
they  are,  yet  when  constantly  used,  even  in 
a  legitimate  manner,  undergo  a  loss  which 
in  a  few  years  sensibly  detracts  from  their 
value. 

Speaking  of  the  present  gold  coins  of  En- 
gland, Prof.  Jevons,says,  "A  large  part  of  the 
gold  coinage  is  worn  below  the  least  current 
weight,  and  all  persons  of  experience  avoid 
paying  old  sovereigns  to  the  Btmk  of  England. 


(14  FIRST  LESSONS  ON  MONEY. 

Only  ignorant  and  unlucky  persons,  or  else 
larger  banks  and  companies  which  cannot 
otherwise  get  rid  of  light  coin,  suffer  loss. 
The  quantity  of  light  gold  coin  withdrawn 
by  the  banks  did  not  for  many  years  exceed 
half  a  million  a  year;  during  the  last  few 
years  it  has  varied  from  £700,000  to  £950,- 
000.  As  the  average  amount  of  gold  coined 
annually  is  four  or  live  millions,  and  the 
coins  melted  or  exported  are  for  the  most 
part  new  and  of  full  weight,  it  follows  ne- 
cessarily, that  the  currency  is  becoming 
more  and  more  deficient  in  weight." 

There  is  great  injustice  in  making  the  loss 
in  the  weight  of  gold  coins  which  have  been 
in  use  for  thirty  or  forty  years  fall  upon  the 
last  holder.  The  mint  should  take  all  light 
coins  at  their  nominal  value  and  replace 
them  by  coins  of  full  weight.  Still  the  loss 
resulting  from  the  use  of  coin  money  is  a 
total  one,  though  borne,  as  it  should  be  by 
the  people  at  large. 

Paper  money  has  this  advantage  over 
metallic  money  that  it  can  be  replaced  when 
worn  by  use,  with  but  tritling  expense. 

Another  advantage  is  that  large  amounts 


PAPER  MONEY.  G5 

are  more  readily  counled.  A  New  York  daily 
paper,  in  leporting  the  business  of  the  Clear- 
ing House  of  that  city  for  that  day  says  that 
its  exchanges  amounted  to  $116,747,578:  the 
balances  to|4,5ol,297.  This  amount  of  bus- 
iness is  not  spoken  of  as  exce])tionally  hirge. 
It  would,  be  simply  impossible  to  do  it  in  a 
single  institution  if  in  e-ich  transaction  gold 
and  silver  were  actually  paid. 

If  paper  money  can  be  made  perfectly  safe, 
without  a  possibility  of  losing  its  value 
either  in  whole  or  in  part,  it  will  be  gener- 
ally preferred  in  common  use  to  gold  or 
silver. 

The  preference  which  the  j)eople  have  for 
paper  money  if  perfectly  safe  is  seen  by  a  fact 
stated  by  the  United  States  Treasurer  in  his 
recent  report.  He  says,  page  14,  "The  issue 
of  silver  cirtificates,  by  treasury  officers  in 
the  South  and.  West,  for  gold  coin  deposited 
with  the  assistant  treasurer  at  New  York, 
under  departmental  circular  of  September 
18,  1880,  was  discontinued  in  January  last 
(1885).  The  amount  which  had  been  issued 
in  this  manner  to  the  date  named  was  $80,- 
730,500." 


66  FIRST  LESSONS  ON  MONEY. 

Gold  coin  was  paid  foi-  these  silver  cer- 
tificates^ redepniable  only  in  silver,  sim])ly 
because  the  people  prefer  good  paper  money 
to  the  very  best  metallic  money. 

But  paper  money  should  be  money,  and 
not  a  promise  to  jiay  money.  Tlie  money 
of  a  country,  gold  and  silver  and  paper, 
shonld  be  interconvt^rtible:  but  neither  kind 
should  be  redeemable.  Payment  in  any  kind 
of  money  should  be  final. 


CHAPTER  IX. 

COINING    MONEY. 

HE  money  of  any  nation  should  be  a  legal 
tender  for  debts  in  every  part  of  that 
nation.  It  should  carry  its  full  nominal 
value  with  it  wherever  it  goes.  But  this  is 
not  likely  to  be  the  case  unless  the  govern- 
ment creates  the  money. 

The  power  to  control  the  money  of  a  na- 
tion carries  with  it  almost  every  other  power. 
The  money  power  is  well  nigh  supreme. 
Hence,  the  right  to  coin  money  is  vested  in 
the  Supreme  Power  of  the  State.  It  is  a 
maxim  of  the  civil  law  that  moneiandi  jus 
principum  ossihus  inhceret.  ''The  right  of 
coining  money  inheres  in  the  bones  of 
princes."  In  all  monarchical  countries 
this  right  is  jealously  guarded  as  the  prerog- 
ative of  the  Crown. 

Says  Prof.  F.  A.  Walker,  "  In  all  lands 
coinage  has  been  one  of  the  most  cherished 


68  FIRST  LESSONS  ON  MONEY. 

prerogatives  of  sovereignty."     (Money,   p. 
168.) 

Our  constitution  vests  in  Congress  the 
right  to  coin  money.  No  state,  however  far 
it  may  have  pushed  its  theories  of  "State 
Rights,"  has  ever  ventured  to  claim  in  words 
this  fundamental  prerogative  of  sovereignty. 
This  right  of  the  National  Government  re- 
mains unchallenged. 

If  the  National  Government  has  the  ex- 
clusive right  to  coin  money,  then  it  should 
furnish  the  money  for  the  use  of  the  people, 
no  matter  of  what  material  it  is  made.  If  a 
substitute  for  gold  and  silver  is  permitted, 
then  the  government  should  furnish  the  sub- 
stitute. This  is  evident.  A  prerogative  can 
be  of  but  little  value  if  it  may  be  easily  sup- 
planted. 

Yet,  up  to  the  period  of  our  civil  war,  the 
bulk  of  the  money  in  use  in  this  country 
was  furnished  by  banks  chartered  by  the 
several  states.  This  was  a  strange  inconsist- 
ency. It  was  a  great  annoyance  and  detri- 
ment to  the  people.  The  money  current  in 
one  State  was  not  good  in  another.  The 
moH'^v  of  Illinois  wonld  not  bnv  n  rlinnfr  in 


COINING  MONEY.  69 

New  York.  Many  of  the  banks  were  worth- 
less. A  general  bank  failure  occurred  every 
few  years. 

Thomas  Jefferson  said  of  the  bank  suspen- 
sion of  1814,  "The  banks  have  pronounced 
their  own  sentence  of  death.  Between  two 
and  three  hundred  millions  of  dollars  of 
their  promissory  notes  are  in  the  hands  of 
the  people  for  solid  produce  and  property 
sold,  and  they  formally  declare  they  will 
not  pay  them.     *     * 

"Thus  by  the  dupery  of  our  citizens,  and 
tame  acquiescence  of  our  legislators,  the  na- 
tion is  plundered  of  two  or  three  hundred 
millions  of  dollars,  treble  the  amount  of  debt 
contracted  in  the  revolution»y  war,  and 
which,  instead  of  redeeming  our  libert}'',  has 
been  expended  on  sumptuous  houses,  carri- 
ages and  dinners.  A  fearful  tax  if  equalized 
on  all,  but  overwhelming  and  convulsive  by 
its  partial  fall."  (Jefferson's  Works,  vol.  6, 
p.  295.) 

That  all  the  money,  paper  as  well  as  met- 
allic, needed  by  the  country  should  be  issued 
by  the  National  Government  directly,  we 
ursfp  frr>m  tlip  folio  win  o-  consirlerntioTis  : 


70  FIRST  LESSONS  ON  MONEY. 

1.  Congress  is  exclusively  empowered  by 
the  Constitution  to  do  if. 

Our  best  writers  on  constitutional  law 
agree  that  the  phrase  "To  coin  money"  ap- 
plies to  paper  as  well  as  metallic  money. 

Judge  Farrar,  in  his  "Manual  of  the  Con- 
stitution," §568,  says: 

"Congress  is  not  lestricted  as  to  the  ma- 
terials they  may  make  use  of,  or  their  wortli 
or  value,  independent  of  tlieir  authorized 
use  as  money;  nor  is  it  required  that  they 
should  have  any  such  value.  Even  the  oper- 
ation of  converting  them  into  money  is 
described  only  by  the  verb  'to  coin,'  whi'h, 
if  it  means  anything  in  addition  to  the  act  of 
converting  it  iflto  money,  includes  only  the 
Government  stamp,  by  which  the  act  is  au- 
thenticated." 

Daniel  Webster  (Works,  vol.  4.  p.  315), 
says: 

"It  is  clear  that  the  power  to  regulate  com- 
merce among  the  states  carries  with  it,  not 
impliedly,  but  necessarily  and  directly,  a  full 
power  of  regulating  the  essential  element  of 
commerce,     namely,    the    currency   of    the 


COINING  MONEY.  71 

country,  the  money  which  constitutes  the 
life  and  soul  of  commerce." 

In  his  "Money  and  the  Mechanism  of  Ex- 
change," p.  317,  ad  sequitur,  Professor 
Jevons  says: 

"The  issue  of  notes  is  more  analagous  to 
the  royal  function  of  coinage  than  to  the 
ordinary  commercial  operation  of  drawing 
bills.  We  ought  to  talk  of  coining  notes, 
as  John  Law  did;  fo  though  the  design  is 
impressed  on  paper  instead  of  metal,  the 
function  of  the  note  is  exactly  the  same  as 
that  of  a  representative  tol^en.  As  to  the 
right  to  issue  promises,  it  no  more  exists  than 
the  right  to  establish  private  mints.  As 
almost  every  one  has  long  agreed  to  place  the 
coinage  of  money  in  the  hands  of  the  Execu- 
tive Government,  so  I  believe  that  the  issue 
of  paper,  representative  money  should  con- 
tinue to  be  practically  in  the  hands  of  the 
Government,  or  its  agents  acting  under  the 
strictest  legislative  control." 

It  would  be  less  absurd  and  less  dangerous 
to  permit  private  individuals, or  corporations 
to  coin  metallic  money  than  to  permit  them 
to  issue  paper  money.     But  the  Constitution 


72  FIRST  LESSONS  ON  MONEY. 

in  prohibiting  the  one  proliit)its  tlie  other. 

2.  Paper  money  issued  by  the  National 
Government  in  a  propeily  limited  amount 
would  be  of  permanent  value  It  would  le^l 
upon  a  real  basis— the  entire  )esoinres  of  the 
country.  Paper  money  issued  ui'on  what  is 
called  a  "gold  basis,"  i-ests  upon  ;i  Jldilioii.s 
basis.  The  banks  do  not  luave  gold  in  their 
vaults  to  the  value  of  the  bills  they  issue.  If 
they  did,  why  issue  the  bills?  Why  not 
put  the  gold  in  circulation  i  But  the  banks 
formerly  issued  at  least  three  times  as  much 
paper  money  as  they  had  coin  with  which  to 
redeem  it.  Said  a  bank  president,  holding 
out  a  bill,  "We  hei-e  promise  to  pay  five 
dollars,  but  there  is  the  tacit  proviso,  if  we 
are  not  called  upon,  to  pay  it.  If  the  pay- 
ment of  all  our  bills  is  demanded  w^  can  but 
suspend." 

Our  National  Bank  Bills  are  good  simply 
because  they  rest  upon  the  credit  of  the 
Government;  they  are  redeemable  in  legal 
tenders  issued  by  the  Government. 

The  Banks  do  not  indorse  their  bills.  They 
are,  therefore,  no  better  than  if  issued  directly 
by  the  Government. 


COINING  MONEY.  73 

3.  It  would  be  a  great  saving  to  the 
country  if  all  the  bills  now  issued  by  the 
National  Banks  were  issued  by  the  Govern- 
ment. These  bills  are  secured  by  Government 
bonds.  On  these  bonds  interest  is  paid.  The 
amount  that  has  already  been  thus  taken 
from  the  tax-payers  and  given  to  the  rich  is 
enormous.  This  drain  from  the  pockets  of 
the  people  into  the  pockets  of  rich  capital- 
ists should  be  stopped.  The  Government 
should,  as  rapidly  as  possible,  pay  these 
bonds  and  issue  all  the  paper  money  direct- 
ly. Let  the  people  at  large  be  the  creditors 
of  the  Government. 

The  total  amount  of  bonds  held  by  the 
National  Banks  November  1st,  1885,  was, 
according  to  the  Report  of  the  Comptroller 
of  the  Currency,  -^808,364,550.  (Report,  p. 
70.)  "The  average  rate  of  interest  now  paid 
by  the  United  States  on  the  bonds  deposited 
as  security  for  circulating  notes  is  a  little 
more  than  .036  per  cent,  upon  their  par 
value."  (Report;  p.  32.)  The  rate  of  inter- 
est formerly  paid  to  the  banks  was  6  per  cent. 
But  even  at  the  reduced  rate,  the  amount  of 
interest  now  yearly  paid  by  the  Government 


74  FIRST  LESSONS  ON  MONEY. 

to  the  National  Banks  is  a  large  sum. 

For  every  liundred  thousand  dollars  in 
bonds  thiit  a  bank  deposits  with  the  Gov- 
ernment, it  gives  the  bank  ninety  thousand 
dollars.  The  Government  pays  the  banks 
interest  on  the  bonds;  but  the  banks  do  not 
pay  the  Government  any  interest  on  this 
money.  The  interest  donated  by  the  Gov- 
ernment to  the  National  Banks  for  the  year 
1885  amounted  to  $10,590,011.42.  If  this 
large  sum  was  donated  yearly  to  the  poor 
families  who  are  struggling  with  hardships 
on  the  frontier  to  make  themselves  homes, 
we  would  not  complain.  But  it  is  given, 
without  any  just  reason,  to  the  rich. 

But  not  only  would  the  interest  be  saved, 
if  the  Government  issued  all  the  paper 
money,  but  much  of  the  principal.  Every 
year  a  large  amount  in  bills  is  destroyed  by 
fire  and  flood  and  other  accidents.  The 
loser  would  be  the  individual,  the  tax- payers 
would  be  the  gainers.  We  may  form  some 
opinion  as  to  what  this  would  amount  to  in 
the  aggregate  from  a  single  circumstance. 
During  the  war,  the  Government  issued 
fractional  currency  to  the  amount  of  45  mil- 


COINING  MONEY.  75 

lions  of  dollars.  When  called  in,  but  30 
millions  were  presented.  The  i:)eople  gained 
15  millions  of  dollars  hy  this  one  transac- 
tion. 

4.  It  would  add  greatly  to  the  prosperity 
of  the  conntrj^  to  release,  for  industrial  pur- 
poses, the  capital  now  tied  np'  b}^  the  "Na- 
tional Banks  in  Governmeiit  bonds.  The 
resources  of  this  country,  to  a"  great  extent, 
are  yet  undeveloped.  There  are  plenty  of 
men  willing  to  work  but  no  mati  llires  them. 
The  capitalist,  who  should  set  the'  tinem- 
ployed  to  building  and  manning'  ships,  and 
railroads,  and  working  mines  and  farms  and 
factories,  spends  at  his  office  an  hour  or  two 
a  day  examining  securities,  reckoning  his 
interest,  and  cutting  off  his  coupons.  Set 
the  three  hundred  and  eight  millions  now 
lying  idle  in  Government  bonds  at  work  in 
legitimate,  useful  enterprises,  and  it  would 
do  a  vast  amount  of  good.  It  would  give  a 
mighty  impetus  to  business  to  unloose  this 
large  amount  of  capital  so  that  it  could' be 
employed  in  j^roductive  industries.  It 
would  make  many  homes  comfortable  that 
are   now   destitute.     It  would   increase  im- 


76  FIRST  LESSONS  ON  MONEY. 

meiisely  the  wealth   of  the  country,  by  en- 
couraging labor,  the  only  source  of   wealth. 

5.  No  self- constituted  body  of  men  should 
have,  under  a  republican  form  of  govern- 
ment, the  power  to  control  the  business  in- 
terests of  the  country,  so  as  to  make  them  at 
their  own  will,  prosperous  or  adverse.  No 
matter  how  respectable  may  be  this  body; 
no  matter  how  wisely,  on  the  whole,  they 
may  use  this  power;  it  is  too  dangerous  for 
any  but  the  people  at  large  to  wield. 

But  the  National  Banks  possess  this  pow- 
er. They  can  make  every  branch  of  business 
lively  by  inflating  the  currency.  They  can 
clog  and  stop  the  wheels  of  industry  by 
contracting  the  currency. 

There  is  no  legal  limit  to  their  power  to 
inflate  the  currency;  or,  on  the  other  hand^ 
to  contract  it. 

One  year,  business  may  be  prosperous, 
prices  good,  labor  in  demand.  Every  body 
is  encouraged  to  enlarge  his  business  facili- 
ties, and  to  go  in  debt,  and  to  make  ventures. 
Then  the  banks  may  contract,  call  in  their 
money,  refuse  accommodations;  and  bank- 
ruptcy and  misery  follow.      This  power,  to 


COINING  MONEY.  77 

u  limited  extent,  was  exercised  in  Jefferson's 
day.     Respecting  it  he  says, 

"It  is  cruel  that  such  revolutions  in  pri- 
vate fortunes  should  be  at  the  mercy  of  ava- 
ricious adventurers,  who,  instead  of  employ- 
ing their  capital,  if  any  they  have,  in  manu- 
factures, commerce,  and  other  useful  pur- 
suits, make  it  an  instrument  to  burthen  all 
the  interchanges  of  property  with  their 
swindling  profits,  profits  which  are  the  price 
of  no  useful  industry  of  theirs."  (Jefferson's 
Works,  vol.  6,  p.  296.) 
Again  he  says,  (Works,  vol.  7,  p.  64), 
"The  bank  mania  is  raising  up  a  moneyed 
aristocracy  in  our  country  which  has  already 
set  the  government  at  defiance, and  although 
forced  at  length  to  yield  a  little  on  the  first 
essay  of  their  strength,  their  principles  are 
unyielded  and  unyielding.  These  have  taken 
deep  root  in  the  hearts  of  that  class  from 
whicli  our  legislators  are  drawn,  and  the  sop 
to  Cerberus,  from  fable  has  become  history. 
Their  principles  lay  hold  of  the  good,  their 
pelf  of  the  bad,  and  thus  those  whom  the  con- 
stitution had  placed  as  guards  to  its  portals 


7S  FIRST  LESSONS  ON  MONEY. 

are  sophisticated  or  suborned  from  tlieir 
duties." 

It  must  be  bornt:  in  mind  that  for  men  to 
obtain  this  power,  the  one  qualiliration  is,  the 
possession  of  money.  No  matter  how  they 
obtained  their  money,  or  what  is  tlieir  char- 
acter. If  ten  men  buy  a  hundred  thousand 
dollars  worth  of  Government  bonds,  they 
can  obtain  a  charter  for  a  National  Bank. 
The  Government  will  give  them  ninety  thou- 
sand dollars  in  bills,  loiihout  interest^  hold 
their  bonds  for  the  redemption  of  these  bills, 
and  yet  pay  them  interest  on  the  bonds. 
These  bills  they  can  loan  out  on  interest  to 
business  men.  Or  they  can  add  ten  thou- 
sand dollars  to  the  money  received  from  the 
Government  and  again  buy  bonds  and  obtain 
the  charter  for  another  bank.  This  opera- 
tion, it  was  said,  was  repeated  ten  times  by 
certain  parties  when  the  National  Bank  Act 
first  became  a  law.  With  less  than  two 
hundred  thousand  dollars  invested  they  drew 
from  the  Government  interest  on  one  million 
of  dollars  !  And  they  did  nothing  contrary 
to  law. 

Tlie  National  Banks   can   expand  or   con- 


COINING  MONEY.  79 

tract  at  pleasure,  the  currency  they  issue. 
In  point  of  fact  they  have  (Report  of  the 
Comptroller  of  the  Cun^ency,  p.  14)  con- 
tracted their  circulation  the  last  three  years 
$48,000,154. 

6.  The  objection  so  often  made,  that  bills 
issued  by  the  Government  are  "fiat  money" 
has  not  in  it  the  slightest  force  whatever. 
It  is  a  ridiculous  attempt  to  frighten  the 
people  with  a  harmless  bugbear.  A  "fiat" 
is  a  decree  or  command.  All  money  is 
"fiat  money."  That  is,  it  is  constituted 
money  by  the  decree  of  the  Government. 

The  material  of  which  it  is  made  has  noth- 
ing to  do  with  it.  Gold  of  the  finest  quality 
is  not  money  until  it  is  made  into  money  by 
the  Government.  Men  may  buy  it  as  a  com- 
modity, but  no  one  is  obliged  to  take  it  for 
a  debt.  But  let  the  Government  coin  it,  and 
stamp  it  as  money,  and  it  becomes  money. 

It  i^asses  now  everywhere  in  the  Nation 
for  the  sum  stamped  upon  it.  Before  it  was 
made  into  coin  it  had  a  market  value,  as 
metal,  but  it  was  not  money.  No  one  was 
obliged  to  take  it.     Whatever  is  legal  ten- 


80  FIRST  LESSONS  ON  MONEY. 

der  is  made  so  by  civil  authority.  It  is  ''tiat 
money." 

Our  gold  coins  are  not  current  in  England. 
They  are  bought,  like  iron  and  steel,  by 
weight,  at  market  value.  Our  metallic 
money  is  there  a  commodity.  Bullion  is 
gold  or  silver  uncoined — usually  in  bars. 

"Within  a  country,"  saj^s  Bagehot,  "the 
action  of  a  Government  can  settle  the  quan- 
tity and  therefore  the  value  of  its  currency, 
but  outside  its  own  country  no  Government 
can  do  so.  Bullion  is  the  'cash'  of  interna- 
tional trade;  j^aper  currencies  are  of  no  use 
there,  and  coins  pass  only  as  they  contain 
more  or  less  bullion."  (Lombard  Street,  p. 
44.) 

The  Revised  Statutes  of  the  United  States, 
Sec.  3,588,  say,  "United  States  notes  shall 
be  lawful  money  and  a  legal  tender  in  pay- 
ment of  all  debts  public  and  private,  within 
the  United  States,  except  for  duties  on  im- 
ports and  interest  on  the  public  debt." 

Thus  the  law  declares  that  United  States 
notes  shall  be — not  the  representative  of 
money — not  a  demand  for  money — but  money 
itself — lawful  money.     And  this  money  was 


COINING  MONEY.  81 

to  be  good  for  all  purposes  for  which  money 
could  be  used,  with  a  single,  specified  excep- 
tion. 

This  exception  was  a  great  mistake.  But 
for  that,  these  notes  would  not  have  depre- 
ciated as  they  did.  The  National  debt  could 
have  been  paid  and  the  Nation  saved  an  un- 
told amount  of  misery. 

All  money,  then,  should  be  issued  by  the 
Government.  The  power  to  issue  paper 
money  should  be  taken  from  x^i'ivate  cor- 
porations and  placed  in  the  hands  of  the 
Representatives  of  tlie  people,  where  by 
right  and  b}^  the  Constitution  it  belongs. 


CHAPTER  X. 

BASIS  OF  PAPER  MONEY. 

[E  have  shown  in  brief  that  the  basis  of 
paper  money  is  actual  property,  and  not 
imaginary  gold  and  silver.  But  there  is  so 
much  misapjDrehension  on  this  subject  that  it 
needs  a  farther  elucidation. 

The  money  i^^sued  by  our  National  Banks 
is  better  than  that  formerly  issued  by  the 
State  Banks,  for  this  reason ;  the  State 
^\\n\^pToinised  to  pay  the  amount  represent, 
ed  by  theit*  bills  in  current  coin\  when  they 
did  not  have,  never  had,  and  never  expected 
to  ha^e  sufficient  coin  to  pay  their  notes  in 
circulation.  When  the  call  to  pay  was 
generally  made  they  met  it  by  suspension. 
They  sometimes  paid  from  ten  to  fifty  cents 
on  the  dollar;  and  sometimes  nothing.  Their 
circulation  rested  on  an  imaginary  basis. 

The  National  Banks  do  not  promise  to 
pay  in  coin;  but  in  United  States  legal  ten- 
ders.    Hence  their  bills  are  as  good  as  the 


BASIS  OF  PAPER  MONEY.  83 

legal  tenders  of  the  United  States  Govern- 
ment, but  no  better.  If  the  banks  fail,  the 
depositors  suffer,  but  the  bills  remain  good. 
They  rest  on  a  solid  basis— on  the  credit  of  the 
government  of  a  country,  rich  in  its  resources 
and  in  the  general  industry  and  thrift  of  its 
inhabitants. 

It  is  remarkable,  that  the  only  paper 
monej'  that  has  never  depreciated  is  that 
which  has  been  issued  by  Governments  to 
meet  an  exigency,  with  no  definite  promise 
to  pay,  either  on  demand  or  at  any  stated 
time. 

Venice  was  founded  on  seventy  or  eighty 
islets  in  a  lagoon  on  the  northwest  fringe  of 
the  Adriatic  Sea,  by  refugees  from  tlie  Huns, 
when  they  ravaged  Italy  A.  D.  452.  It  soon 
rose  to  importance,  and  for  man}'  years  was 
one  of  the  first  commercial  cities  in  Europe. 

In  the  year  1171  the  Venetian  republic 
(Abridged  from  "-The  Money  Question"  by 
Wm.  A.  Berkey.  See  also  N.  A.  R.  Sept. 
1885,  p.  205.)  being  engaged  in  expensive 
wars,  made  forced  loans  upon  its  wealthiest 
citizens,  on  which  loans  it  agreed  to  pay  four 
per  cent  interest  per  annum.     A  chamber  of 


84  FIRST  LESSONS  ON  MONEY. 

loans  was  organized  and  the  creditors  made 
the  managers.  Each  one  was  credited  on  tlie 
books  the  amount  of  his  loan.  These  loans 
were  transferable  on  the  books,  either  in 
whole  or  in  part.  This  institution  naturally 
grew  into  a  bank. 

It  was  soon  found  that  to  pay  debts  of 
large  amounts  by  a  transfer  of  a  loan  on  the 
books  was  much  more  easily  and  safely  done 
than  by  cariying  and  counting  coin.  Hence, 
after  the  Republic  censed  to  want  money, 
merchants  ;iud  others  deposited  coin  and 
secured  credits.  The  transfers  were  made 
so  frequently  that  no  one  cared  for  the  inter- 
est, and  the  government  ceased  to  pay  inter- 
est. 

In  the  year  1423  it  was  decreed  that  all 
bills  of  exchange  payable  in  Venice  should 
be  paid  in  this  bank  unless  otherwise  stipu- 
lated. This  added  greatly  to  its  business. 
Its  paper  was  generally  at  a  premium,  often 
so  great  that  the  premium  was  limited  by 
law  to  20  per  cent. 

Though  established  at  so  early  a  period, 
when  society  was  unsettled,  and  the  subject 
of  finance  was  so  little  undei'stood,  this  bank 


BASIS  OF  PAPER  MONEY.  M 

never  suspended,  nor  failed.  Durincj  the 
600  years  of  its  existence  there  was  never  a 
money  panic  at  Venice.  Its  credits  remained 
good  until  the  Venetian  Republic  was 
overthrown  in  the  wars  of  Napoleon. 

The  Bank  of  England  was  also  created  to 
meet  the  necessities  of  the  Government. 
Charles  II.  committed  a  great  crime  and 
blunder.  "The  goldsmiths  of  London,"  says 
Walter  Bagehot,  "who  then  carried  on  upon 
a  trifling  scale  what  we  should  now  call 
banking,  used  to  deposit  their  reserve  of  treas- 
ure in  the  'Exchequer, 'withtlie  sanction  and 
under  the  care  of  the  Government.  In  many 
European  countries  the  credit  of  the  State 
had  been  so  much  better  than  any  other  cred- 
it, that  it  had  been  used  to  stiengthen  the 
beginnings  of  banking.  The  honesty  of  the 
English  Government  was  trusted  implicitly. 
But  Charles  II.  showed  that  it  was  trusted 
undeservedly.  He  shut  up  the  'Exchequer,' 
would  pay  no  one,  and  so  the  goldsmiths 
were  ruined. 

The  credit  of  the  Stuart  Government  never 
recovered  from  this  monstrous  robbery,  and 
the  Government  created  by  the  Revolution 


86  FIRST  LESSONS  ON  MONEY. 

of  1688  could  hardly  expect  to  be  more 
trusted  with  money  than  its  predecessor.  A 
government. created  by  a  revolution  hardly 
ever  is.".  (Lombard  Street  p.  93.) 

lnJ694,  the  credit  of  the  Government  of 
William  III.  was  so  low  in  London  that  it 
was  impossible  for  it  to  borrow  any  large 
sunu; "/...■•••.' '--  ":•.'  ■:    ■■ 

TUevGrQverntne.nt  was  in  the  greatest  finan- 
cial straits.  At  last  they  hit  upon  a  scheme 
to  rpU^ye  their  ^pressing  necessities. 

"The  plan,'.' -says  Macaulay,  "was  that 
twelve  hundred  thousand  pounds  should  be 
raised  at  what  was  then  considered  the 
moderate  rate  of  8  per  cent,  interest.  In  or- 
der to  induce  the  subscribers  to  advance 
the  money  prom^itly  on  terms  so  unfavorable 
to  the  public,  the  subsciibers  wei'e  to  be  in- 
coiporated  by  the  name  of  the  Governor 
and  Company  of  the  Bank  of  England.  They 
weie  so  incorporated  and  then  £1,200,000 
was  obtained."     (Lonibard  Street  p.  94.) 

This   was   the   beginning   of   the   English 
National  Debt. 

To  tins  Bank  weie  gi anted  several   impor- 
tant privileges.. 


B.\SIS  OP  PAPER  MONEY.  87 

1.  It  was  to  be  the  sole  depository  of  the 
Government  funds. 

2.  It  was  the  only  bank  in  whfch  the 
stockholders  were  not 'personally  Ti;ible  for 
its  debts.  '. 

3.  It  had  the  piivilege  of  being-  the  sole 
joint  stocJc  company  permitted  to  issne  bank 
notes  in  England.  :    .: 

These  bank  notes  were  to  be  redeemable 
in  coin. 

In  times  of  panic  the  Bank  suspended  cash 
payments.  At  one  time  the  suspension  lasted 
22  years,  from  1797  to  1810. 

In  1844,  the  Bank  of  England  was  re-or- 
ganized. The  Bank  was  authorized  to  issue 
bills  to  the  amount  of  fifteen  million  jiqiinds 
sterling  secured  by  Government  bonds  mits 
possession,  loitliout  being  ohllgeS  to  redeem 
these  hills  in  coin.  All  notes  that  it  issued 
above  this  amount  were- to  be  secured  by 
gold  and  silver  coinand  buliton  initsyt^ults. 
In  consequence  of  this'' arraiigeriient  '\¥  has 
not  again  suspended.  1 1  has  passed  thtt)ugh 
several  panics'  since,  biit  lias  not  'been 
obliged  to  suspend  specie  payments  cm  that 
part  of  its   circulation   which  it  was  under 


88  FIRST  LESSONS  ON  MONEY. 

obligation  to  pay  in  coin.  So  large  a  portion 
of  its  circulation  is  secured  by  the  credit  of 
the  Government  that  the  Bank  is  able  to 
keep  the  rest  good  under  all  circumstances. 

We  see  then  from  these  instructive  exam- 
j>les  that  the  proper  basis  for  paper  money 
is  the  credit  of  the  Government — that  is  the 
X)roperty,  the  business,  and  the  resources  of 
the  entire  country. 

Our  National  Bank  bills  rest  upon  this 
basis,  and,  therefore,  they  are  better  than 
any  paper  money  this  country  ever  had,  ex- 
cept the  greenbacks  which  they,  to  an  extent 
supplanted,  which  rest  upon  the  same  basis. 

But  there  is  the  objection  to  the  issuing  of 
paper  money  by  the  National  Banks 
which  we  have  already  mentioned.  The 
Government  gives  these  Banks  the  use,  with- 
out interest,  of  all  the  notes  they  have  in  cir- 
culation. 

The  National  Banks  pay  a  tax  of  one-half 
of  one  per  cent.on  their  circulation,and  this  is 
the  only  offset  they  make  for  the  free  use  of 
the  money  furnished  them  by  the  Govern- 
ment. The  proceeds  of  this  tax  are  used  to 
pay  the  cost  of  printing   the  bills  and  other 


BASIS  OF  PAPER  MONEY.  89 

expenses  incident  to  the  furnisliino;  of  these 
bills  by  the  Government. 

The  objection  is  sometimes  made  to  paper 
money  that  it  has  but  little  intrinsic  value. 
The  same  objection  might  be  made  to  an 
ordinary  deed.  But  it  conveys  a  title  to  that 
which  has  value. 

Properly  speaking,  the  intrinsic  value  of 
any  thing  to  man,  is  the  value  that  inheres 
in  the  thing  itself.  The  intrinsic  value  of 
food  to  a  starving  man  is  the  same  whether 
it  costs  little  or  much. 

The  market  value  of  any  thing  is  the  price 
which  it  will  bring.  Iron,  in  itself  consid- 
ered, is  of  much  more  value  to  man  than 
gold  or  silver.  We  could  not  very  well  keep 
house  without  iron.  But  its  abundance,  and 
the  ease  with  which  it  is  obtained  makes  it 
cheap.  When  a  savage  who  had  never  heard 
of  gold  or  money,  was  offered  by  Captain 
Cook,  a  guinea,  or  a  handful  of  nails,  for 
provisions,  he  wisely  chose  the  latter.  They 
had  the  greater  intrinsic  value. 


CHAPTER  XL 

BANKS. 

jllN'  the  modern  mode  of  conducting  busi- 
ness, banks  are  a  necessity.  But  the 
issuing-  of  money  is  no  necessary  part  of 
banking.  Some  of  the  best  banks  have 
never  had  a  bill  of  their  own  issue  in  circu- 
lation. It  would  be  about  as  proper  for  a 
farm  to  issue  money  as  for  a  bank  to  issue 
money. 

Referring  to  the  bank  of  England,  Prof. 
F.  A.  Walker  says,  "The  greatest  bank  in 
the  world  is  not,  as  a  bank,  an  issuer  of  notes, 
a  manufacturer  of  paper  money.  Nor  are 
the  joint  stock  banks  of  London,  with  their 
enormous  deposits  and  discounts  dependent 
in  the  smallest  degree  for  their  power  or 
their  profits  on  note  circulation.  No  London 
bank  can  issue  notes,  nor  can  any  bank 
which  has  been  chartered  since  May  6,  1844, 
while  the  issues  of  the  English  banks  then 
existing  are  limited  to  their  ordinary   out- 


BANKS.  91 

standing  circulation  befoie  that  date." 
(Mone}^  p.  449.) 

Among  tliepioper  functions  of  a  bank  are 
these:  1.  To  receive  deposits.  The  capital  of  a 
bank  is  not  needed  so  much  to  carry  on  its 
business  as  to  inspire  public  confidence. 
People  who  have  confidence  in  the  bank, 
deposit  their  money  with  it  for  safe  keeping, 
and  that  usually  for  short  periods,  subject  to 
being  paid  whenever  called  for.  This  money 
the  bank  lends  on  short  loans.  'Thus  a 
bankers  business — his  proper  business" — 
says  Walter  Bageliot — "does  not  begin  while 
he  is  using  his  own  money;  it  commences 
when  he  begins  to  use  the  capital  of  others." 
(Lombard  Street,  p.  244.) 

2.  To  make  discounts,  or  loans,  on  good  se- 
cuiity  and  for  a  short  time.  The  same  men 
who  deposit  money  with  the  bank,  subject  to 
call,  that  is,  loan  it  to  the  bank,  frequently 
have  occasion  to  borrow  of  the  bank.  But  all 
who  deposit  monej''  do  not  do  it  at  tlie  same 
time,  and  all  who  borrow  do  not  borrow  at  the 
same  time.  Money  is  being'  paid  out  and 
paid  in  to  the  bank  all  the   time,  and   these 


»2  FIRST  LESSONS  ON  MONEY. 

amounts  generally  very  neaily  balance  each 
other. 

3.  To  exchange — that  is  to  receive  money 
at  the  bank  and  pay  it  out  in  a,  distant,  or 
even  foreign  city.  Usually,  banks  have 
funds  on  deposit  at  a  convenient  business 
metropolis  for  this  purpose. 

Banks  do  not  need  subsidies  from  the  Gov- 
ernment any  more  than  mills  or  stores  or 
farms.  Wherever  a  bank  is  really  needed, 
a  bank  will  be  established.  The  demand 
will  bring  a  supply.  Men  of  means  will 
enter  upon  the  business  of  banking  as  they 
do  upon  any  other  kind  of  business— to  make 
money.  For,  apart  from  issuing  bills,  bank- 
ing, when  properly  conducted,  is  profitable 
business.  In  speaking  of  joint  stock  com- 
panies, Walter  Bagehot  says,  ''As  a  rule,  the 
most  profitable  of  these  companies  are  banks. 

Indeed,  all  the  favoring  conditions  concur 
in  many  banks.  An  old,  established  bank 
has  a  'prestige'  which  amounts  to  a  'priv- 
ileged opportunity;'  though  no  exclusive  right 
is  given  to  it  by  law,  a  peculiar  power  is  given 
to  it  by  opinion.  The  business  of  banking 
ought  to  be  simple;  if  it  is  hard  it  is  lorong. 


BANKS.  93 

The  only  securities  which  a  banker,  using 
money  that  he  may  be  asked  at  short  notice 
to  repay,  ought  to  touch,  are  those  which  are 
easily  saleable  and  easily  intelligible.  If 
there  is  a  diflEiculty  or  a  doubt,  the  security 
should  be  declined.  No  business  can  of 
course  be  quite  reduced  to  fixed  rules.  There 
must  be  occasional  cases  which  no  precon- 
ceived theory  can  define.  But  banking  comes 
as  near  to  fixed  rules  certainly  as  any  existing 
business,  perhaps  as  any  possible  lousiness. 
The  business  of  an  old,  established  bank  has 
the  full  advantage  of  being  a  simple  business, 
and  in  part  the  advantage  of  being  a  monop- 
oly business.  Competition  with  it  is  only 
open  in  the  sense  in  which  competition  with 
"the  London  Tavern"  is  open;  any  one  that 
has  to  do  with  either  will  pay  dear  for  it. 

But  the  main  source  of  the  profitableness 
of  established  banking  is  the  smallness  of  the 
requisite  capital.  Being  only  wanted  as  a 
"moral  influence,"  it  need  not  be  more  than 
is  necessary  to  secure  that  influence.  Al- 
though, therefore,  a  banker  deals  only  with 
the  most  sure  securities,  and  with  those 
which  yield  the  least  interest,  he  can,  never- 


94  FIRST  LESSONS  ON  MONEY. 

theless,  gain  md  divide  a  very  large  ]irolit 
upon  his  own  capital,  because  the  money  in 
his  hands  is  so  much  larger  than  that  capi- 
tal. 

Experience,  as  shown  by  plain  figures, 
confirms  these  conclusions."  (Lombard 
Street,  p.  244.  et  seq.) 

He  then  gives  the  respective  profits  of  HO 
banks  in  England,  Scotland  and  Ii  eland. 
These  banks  pay  dividends  as  follows: 

15  banks  pay  above  20  per  cent. 
SO      "        "    between  15  and  20  per  cent. 
36      "        "  •'        10     "    15 

3'i       '•        "  "  5     "     10 

3  only  pay  less  than  5  per  cent. 

''That  is  to  say,  above  25  per  cent  of  tlie 
capital  employed  in  these  banks  pays  over 
15  per  cent,  and  62  1-2  per  cent  of  the  capi- 
tal pays  more  than  10  pier  cent.  So  striking 
a  result  is  not  to  be  shown  in  any  other  joint 
stock  trade. 

"The  period  to  which  these  accounts  refer 
was  certainly  not  a  particularly  profitable 
one — on  the  contrary,  it  has  been  specially 
unprofitable.  The  rate  of  interest  has  been 
very  low,  and  the  amount  of  good  security 


BANKS.  95 

in  the  market  is  small.  Many  banks — to 
some  extent  most  banks — probably  had  in 
their  books  painful  reminiscences  of  1866. 
The  fever  of  excitement  which  passed  over 
the  nation  was  strongest  in  the  classes  to 
whom  banks  lent  most,  and  consequently 
the  losses  of  even  the  most  careful  banks 
(save  of  those  in  rural  and  sheltered  situa- 
tion) were  probably  greater  than  usual.  But 
even  tried  by  this  very  unfavoiable  test 
banking  is  a  trade  profitable  far  beyond  the 
average  of  trades." 

These  remarks,  coming  from  a  high  finan- 
cial authority,  are  made  respecting  banks  in 
countries,  the  resources  of  which  are  well 
developed.  Money  cannot  be  used  to  the 
advantage  that  it  can  in  this  country.  There 
is  not  the  demand  for  it  that  there  is  here, 
nor  can  they  afford  to  pay  the  sam.e  rate  of 
interest. 

Then,  to  have  banks,  it  is  not  necessary  to 
have  '  'National  Banks. "  It  is  not  necessary 
that  the  use  of  the  capital  of  these  banks 
shall  be  furnished  by  the  Government,  free 
of  interest.  Let  those  who  engage  in  the 
banking  business  furnisli  their  own  capital. 


96  FIRST  LESSONS  ON  MONEY. 

Some  have  done  so  all  along. 

We  give  a  sketch,  kindly  furnished  ns  by 
the  cashier  of  the  Chemical  Bank  of  New 
York,  Wm.  J.  Quinlan,  Jr.: 

"The  Chemical  Manufacturing  Co.  was 
chartered,  in  1824,  with  the  privilege  of 
banking.  The  charter  expired  in  1844,  when 
the  Chemical  Bank  was  organized,  with  a 
capital  of  $300,000.  On  January  1st,  1849, 
the  first  dividend  was  paid,  being  6  percent., 
the  surplus  then  amounting  to  about  $200,- 
000.  A  yearly  dividend  of  12  per  cent,  was 
paid  for  several  years,  which  was  then  in- 
creased to  18  per  cent,  per  annum ;  in  a  few 
years  the  dividend  was  increased  to  24  per 
cent,  per  annum;  again,  to  36  per  cent.; 
again,  to  60  per  cent.,  and  in  1872  the  divi- 
dend was  made  100  per  cent,  per  annum, and 
has  continued  at  that  rate  to  the  present 
time.  All  the  accumulations  have  been 
earned  since  1844. 

The  bank  became  the  "  Chemical  National 
Bank  of  New  York"  in  1865,  under  the  pro- 
vision of  Congress,  allowing  State  organiza- 
tions to  enter  the  National  system. 

The  Chemical  Bank  issued  currency,  and 


BANKS.  97 

there  is  about  $10,000  yet  outstanding.  The 
Chemical  National  Bank  never  issued  any 
bills. 

The  bank  has  never  suspended. 

The^^ar  value  of  each  share  is  $100.  The 
bid  price  is  $2,800  to  $2,900,  for  each  share, 
but  it  is  rarely  offered  for  sale,  excepting 
when  an  estate  is  closed. 

Dividends  paid  since  1844,  in  round  num- 
bers, 16,000,000. 

Our  success  is  largely  due  to  the  able 
management  of  Mr.  John  Q.  Jones,  who  was 
President  from  1844  to  his  death,  1878,  and 
to  that  ot  our  present  President,  Geo.  G. 
Williams,  who  was  Cashier  from  1855  to 
1878,  and  who  succeeded  Mr.  Jones  to  the 
Presidency.  Besides,  we  have  always  been 
blessed  with  an  able  and  influential  Board  of 
Directors.  Yery  resp'y, 

Wm.  J.  QUINLAN,  Jk., 

Cashier." 
The  report  of  this  bank,  published  Oct. 
1st,  1885,  showed  a  suri;)lus  fund  of  four 
millions  of  dollars.  It  has  been  so  common 
in  this  country  for  banks  to  issue  money 
that  the  impression  is  quite  general  that  we 


98  FIRST  LESSONS  ON  MONEY. 

cannot  have  banks  unless  they  are  permitted 
to  issue  money.  This  impression  we  see  is 
without  foundation. 

Nor  is  banking  such  a  difficult  business 
that  only  men  of  extraordinary^  ability  can 
master  it.  "Any  careful  person,"  says  Walter 
Bagehot,  (Lombard  Street,  p.  256.)  "who  is  ex- 
perienced in  figures,  and  has  real  sound  sense, 
may  easily  make  himself  a  good  banker. 
The  modes  in  which  monej^  can  be  safely  lent 
by  a  banker  are  not  inany,and  a  clear-headed, 
quick,  industrious  person  may  soon  learn  all 
tnat  is  necessary  about  them." 

The  most  im.portant  Bank  in  the  world  is 
controlled  by  men  not  brought  up  to  the 
business  of  a  banker.  "By  old  usage,  the 
directors  of  the  Bank  of  England  cannot  be 
themselves  by  trade,  bankers.  In  London, 
no  banker  has  a  chance  of  being  a  Bank 
director,  or  would  even  think  of  attempting 
to  be  one."  (Lombard  Street,  p.  212). 


CHAPTER  XII. 

AMOUNT  OF  MONEY  NEEDED. 

^HE  amount  of  mouey  which  our  Nation 
1  needs  to  carry  on  the  business  of  the 
country  cannot  be  definitely  stated.  We 
need  more  in  proportion  to  the  number  of 
inhabitants  than  old  nations,  the  resources 
of  svhicli  are  generally  developed.  We  are 
an  active,  restless,  manufacturing,  trading 
people:  and  we  need  more  money  than  we 
should  if  we  were  settled  down,  contented 
to  qiwetly  earn  our  living, and  nothing  more, 
from  the  cultivation  of  the  soil.  But  we 
raise  enormous  crops  to  sell;  and  we  make 
and  sell  and  buy  vast  quantities  of  manufact- 
ured articles,  and  it  takes  a  great  deal  of 
money  to  carry  on  all  this  business  easily. 

-1.  We  should  have  money  enough  in  the 
country  to  do  all  the  work  for  which  money 
is  needed.  The  attributes  of  money  should 
not  be  given  to  anything  but  money. 

A  piece  of  monev  carries  with  it  the  value 


100  FIRST  LESSONS  ON  MONEY. 

stamped  upon  it,  wherever  it  goes  in  the  na- 
tion that  coined  it.  A  dollar  is  a  dollar, 
whether  obtained  by  honest  labor,  or  by 
gambling,  or  by  robbery. 

But  this  should  not  be  the  case  with  any 
other  paper  than  paper  money.  It  is  not 
with  a  deed.  A  deed  carries  with  it  no  bet- 
ter title  to  the  property  which  it  assumes  to 
convey  than  the  maker  of  it  possessed.  If 
there  is  a  taint  in  the  title,  the  deed  carries 
the  taint  with  it.  This  should  be  the  case 
with  every  kind  of  paper  that  is  used  to 
transfer  values,  except  actual  money.  There 
is  great  need  of  a  radical  change  in  our  laws 
in  this  respect. 

If  a  promissory  note  is  obtained  by  fraud, 
it  is  worthless  in  the  hands  of  the  man  who 
obained  it.  He  cannot  collect  it  by  law.  But 
he  sells  it  to  a  money  shark  for  half  its  face, 
and  the  new  owner  readily  obtains  judg- 
ment against  the  victimized  maker,  for  all 
that  the  note  calls  for,  with  interest  and 
costs.  This  opens  the  way  to  endless  ras- 
cality. It  encourges  villainy  in  every  form 
that  depraved  ingenuity  can  devise. 


AMOUNT  OF  MONEY  NEEDED.  lOi 

Similar  items  to  the  following,  which  we 
clip  from  to-day's  paper, are  not  uncommon: 

"  The  '  preacher  '  is  the  latest  swindling  dodge 
being  worked  in  Central  Iowa.  He  ca'ls  on  his 
way  distributing  Bibles,  and  often  presents  the 
family  with  a  handsome  book.  He  then  asks  for 
dinner  or  other  meal,  and  then  takes  a  receipt  for 
twenty-five  cents  paid  for  the  meal.  A  few  months 
later  the  neighboring  bank  calls  for  the  payment 
of  a  note  for  a  large  amount." 

There  are  many  whose  sole  business  is  to 
obtain  money  by  similar  methods.  A  gentle- 
man in  appearance  calls  upon  a  farmer  and 
explains  to  him  a  valuable  farm  implement. 
He  appoints  him  local  agent  and  gets  him  to 
sign  an  apparently  harmless  contract.  Be- 
fore ninety  days  are  up  a  money  shaver  in 
the  adjoining  village  gives  him  notice  that 
he  holds  his  promissory  note  for  several 
hundred  dollars  !  He  has  given  no  note,  and 
seeks  an  explanation.  The  signature  is  gen- 
uine: he  cannot  deny  it.  He  finds  that  when 
he  signed  the  contract  he  unwittingly  signed 
a  note,  artfully  concealed.  But  he  is  com- 
pelled to  pay  it  to  the  '■''innocenf  holder. 
At  one  time  this  fraud  was  carried  on  exten- 
sively, and  hundreds  were  made  victims. 


102  FIRST  LESSONS  ON  MONEY. 

Depraved  ingenuity  is  tasked  to^  the  ut- 
most to  obtain  fraudulent  paper  for  "inno- 
cent holders''  to  collect. 

Sometimes  whole  communities  are  swin- 
dled. A  few  months  ago,  fraudulent  county 
bonds  were  issued  in  Indiana  by  rascally 
officials.  They  sold  these  bonds  for  money, 
traded  them  for  horses  or  buggies  or  any 
thing  they  could  get  in  exchange.  One  of 
them  said  in  his  safe  retreat  in  Canada,  that 
he  had  issued  of  these  fraudulent  bonds 
enough  to  fill  his  room! 

In  many  towns  in  the  State  of  Mew  York, 
prominent  citizens  were  hired  to  go  around 
and  get  the  consent  of  the  tax-payers  to  bond 
the  town  for  a  jn-oposed  railroad.  No  pub- 
lic meeting  was  called,  no  opportunity  for 
discussion  was  presented.  They  obtained  a 
majority  of  the  names.  The  town  was  bonded 
for  many  thousands  of  dollars.  The  bonds 
were  sold.  But  the  railroad  was  never  built. 
There  was  probably  no  intention  to  build  it. 
The  Company  which  obtained  the  bonds 
could  never  collect  them,  but  in  the  hands 
of  "innocent  holders"  they  must  be  paid. 

It  is  fully  time  that  the  laws  in  such  cases 


AMOUNT  OF  MONEY  NEEDED.  103 

and  all  judicial  decisions  concerning-  tlieni, 
vv  ere  reversed.  All  commercial  paper  should 
be  divested  of  the  attributes  of  money.  If  a 
man  buys  a  horse  he  buys  it  at  his  own  risk. 
Though  he  be  an  "  innocent"  purchaser, the 
sheriff  takes  it,  if  the  horse  was  stolen.  The 
buyer  of  property  gets  no  better  title  to  it 
than  the  man  had  of  whom  he  bought.  It 
should  be  so  in  the  sale  of  a  promissory  note, 
or  of  any  other  evidence  of  indebtedness.  No 
promissory  note,  bond,  check,  draft,  or  other 
evidence  of  indebtedness  should  acquire  any 
degree  of  validity  by  simi^ly  passing  into 
the  hands  of  a  third  party.  Any  defence  of 
the  maker,  or  indorser,  should  possess  the 
same  virtue  against  whoever  may  hold  it 
that  it  would  possess  against  the  party  to 
whom  it  was  given. 

It  is  objected  that  this  would  hurt  credit. 
It  would  hurt  the  credit  of  scheming  sv»'in- 
dlers.  But  this  is  precisely  what  ought  to 
be  done.  It  would  close  up  one  of  the  oldest 
and  most  faithfully  worked  mines  of  fraud. 
It  would  render  impossible  countless  villain- 
ies that  are  practiced  upon  the  unsuspecting, 
and   often   even   upon   experienced  men   of 


101  FIRST  LESSONS  ON  MONEY. 

])usiness,  and  upun  whole  communities.  It 
would  put  a  stop  to  many  a  scheme  to  plun- 
der towns  and  cities  under  cover  of  law. 

But  it  would  render  credit  stronger  by 
rendering  it  safer.  It  would  put  a  premium 
upon  honesty.  Ever}^  man  who  buys  any 
form  of  credit,  would  be  careful  with  whom 
he  deals.  He  would  depend  upon  the 
responsibility  of  the  party  of  whom  he  buys. 
The  same  rule  should  hold  in  regard  to  the 
purchase  of  what  is  called  "commercial  pa- 
per" that  does  in  the  purchase  of  other  com- 
modities. The  maxim  of  the  Civil  Law, 
Caveat  emptor — Let  the  purchaser  heioare, 
should  apply  in  this, as  in  other  cases.  There 
is  a  stronger  reason  for  it  because  of  the 
greater  opportunity  for  fraud.  The  property 
of  money  of  carrying  a  title  to  it  on  its  face 
should  not  be  given  to  any  thing  else. 

Properly  speaking,  "nothing  can  perform 
the  functions  of  money  w^iich  is  not  money." 
^Walker  on  Money,  j).  405) 

The  country,  then,  should  be  so  well  sup- 
plied with  money  that  there  would  be  no 
need  of  substitutes.     If   any  are   provided, 


AMOUNT  OF  MONEY  NEEDED.  105 

their  circulation  should  be  discouraged  by 
law. 

2.  The  volume  of  money  in  circulation 
should  preserve  from  year  to  year  as  nearly 
as  possible  the  same  relative  proportion  to 
the  number  and  wants  of  the  people.  There 
should  be  no  violent,  arbitrary  tiuctuarions. 

Any  great  inliation  of  the  currency  raises 
the  price  of  property,  and  in  the  same  pro- 
portion, lessens  the  value  of  debts.  It  is  an 
injustice  to  the  class  of  creditors, and  encour- 
ages wild  speculations. 

To  contract  the  currency  increases  the  val- 
ue of  debts,  lowers  the  price  of  property, and 
robs  debtors  by  obliging  them  to  sell  a 
greater  amount  of  property  to  pay  their 
debts.  An  immense  wrong  has*been  done  to 
the  American  people  by  contracting  the  vol- 
ume of  their  currency.  In  this  way  the  val- 
ue of  the  national  debt  was  doubled. 

Ninety-live  members  of  the  laat  House  of 
Representatives  of  the  United  States,  say  in  a 
letter  to  the  President  of  the  United  States, 
Feb.  11,  1885,  "It  can  be  shown  that  it  will 
take  more  labor  or  more  of  the  produce  of 
labor   to   pay  wh;it   remains  of  our  national 


106  FIRST  LESSONS  ON  MONEY. 

debt  now  than  it  would  have  taken  to  pay  it 
all  at  the  close  of  the  war.  Eighteen  million 
bales  of  cotton  were  the  equivalent  in  value 
of  the  entire  interest  bearing  debt  in  1565, 
but  it  will  take  thirty-five  million  bales  at 
the  price  of  cotton  now  to  pay  the  remainder 
of  the  debt.  Twentj^-five  million  tons  of  bar 
iron  would  have  paid  the  whole  debt  in  1865. 
It  will  now  take  thirty  five  million  tons  to 
pay  what  remains  after  all  that  has  been 
paid."  (iSorth  American  Review,  Nov.  1885, 
p.  493.) 

But  individual  debtors  suffer  most  from  the 
enhancement  of  the  value  of  debts  they  owe. 
Many  industrious  men  have  lost  the  frugal 
savings  of  years,  because  it  took  much  more 
of  the  products  of  their  labor  to  pay  the 
mortgage  on  the  place  they  bought,  than  it 
did  to  represent  it  when  the  debt  was  made. 
Many  a  home  half  paid  for  when  bought 
would  not  sell  a  few  years  after,  for  enough 
to  pay  the  balance.  If  a  law  were  to  be  en- 
acted saying  that  a  debt  made  for  one  hun 
dred  dollars,  on  which  interest  had  been  reg- 
ularly paidjCould  not  be  discharged  with  a  less 
sum  than  two  hundred  dollars,  it  would  be 


AMOUNT  OF  MONEY  NEEDED.     107 

seen  to  be  no  better  than  robbery.  But  this 
is  precisely  what  is  done  when  the  currency 
of  the  country  is  so  contracted  as  to  require 
double  the  labor  to  pay  a  debt  that  it  did 
when  the  debt  was  made.  It  is  legalized 
robbery. 

Jeiierson  says,  "This  state  is  in  a  condi- 
tion of  unparallelled  distress.  The  sudden 
reduction  of  the  circulating  medium  from  a 
plethory  to  all  but  annihilation  is  producing 
an  entire  revolution  of  fortune.  In  other 
places,  I  have  known  lands  sold  by  the  sher- 
iff for  one  year's  rent."  (Works  v.  7.  i51.) 

Many  cannot  understand  why  there  is  so 
much  money  to  be  lent  when  the  currency  is 
being  contracted.  They  say  that  money  is 
plenty  because  any  amount  of  it  can  be  had 
on  good  security.  The  reason  is  that  nobody 
who  has  money  is  willing  to  put  it  into  busi- 
ness. One  will  not  buy  property  only  as 
obliged  to,  wlien  he  knows  that  the  property 
will  depreciate  on  his  hands.  The  manufac- 
turer properly  avoids  getting  a  stock  of  goods 
on  hand  which  he  must  sell  for  less  than  it 
cost  to  make  them.  The  consequence  is  that 
every  one  who  has  money,  is  anxious  to  loan 


lOS  FIRST  LESSONS  ON  MONEY. 

it  on  good  security.  Hence  there  is  this 
seeming  contradiction,  when  money  is  scarce 
in  the  country  generally  there  is  plenty  of 
it  on  tlie  marl^et  in  the  money  centers. 

There  should  be,  therefore,  not  only  a 
plentiful,  but  also  a  steady  supply  of  money 
in  the  country.  It  should  not  be  subject  to 
arbitrary  variation  brought  about  by  the 
greed  of  men.  When,  on  some  emergency, 
more  than  an  ordinary  amount  of  money  is 
required,  a  safe  provision  should  be  made  to 
meet  the  demand. 

*' There  will  be,"  says  Alexander  Del  Mar, 
(N.  A.  Review,  Nov.,  1885),  "no  settlement 
of  the  laws  relating  to  money  until  the  Gov- 
ernment assumes  entire  control  of  it;  and 
this  is  what  should  be  done  without  further 
delay.  The  interests  of  society  demand  a 
precise,  a  stable,  an  equitable  measure  of 
value,  and  the  Government  alone  can  furn- 
ish one.  The  preservation  of  our  national 
unity  invites  the  exertion  of  a  force  which, 
like  that  of  a  uniform  money,  is  all  perva- 
ding in  its  influence  and  constant  in  its 
operation.  And  when  we  come  to  the  law 
of  the  matter,  we  have   only  to  recall  the 


AMOUNT  OF  MONEY  NEEDED-  109 

words  of  the  great  Expounder  of  the  Consti- 
tution, 'Whenever  paper  is  to  perform  the 
functions  of  coin,  its  regulation  naturally 
belongs  to  the  hands  which  hold  the  power 
over  the  coinage.' " 

It  is  irai3ossible  to  determine,  with  precis- 
ion, just  how  much  money  a  nation  should 
have  in  circulation.  It  should  have  enough 
to  meet  all  its  wants. 

"Mr,  Mulhall  gives  the  total  amount  of  all 
kinds  of  money,  gold,  silver,  and  paper,  per 
inhabitant,  as,  in  Britain,  five  pounds,  six 
shillings;  in  France,  ten  pounds,  ten  shil- 
shillings;  in  the  United  States,  five  pounds 
fifteen  shillings.  Holland,  a  mercantile  na- 
tion, stands  eight  pounds  five  shillings.  The 
nations  having  little  business  and  no  great 
amount  of  wealth  have  small  amounts  of 
circulating  medium.  Russia  having  only 
one  pound,  fifteen  shillings,  a  great  part  of 
which  is  irredeemable  paper."  (N.  A.  "Re- 
view, Nov.,  1885.) 

According  to  this  estimate,  France  has  al- 
most double  the  amount  of  money  in  circu- 
lation, per  inhabitant,  that  the  United  States 
has.     But  that  France  has  none  too  much  is 


110  FIRST  LESSONS  ON  MONEY. 

evident  from  the  general  prosperity  her  peo- 
ple enjoy.  Notwithstanding  the  great  re- 
verses this  nation  met  with  lately  in  her  war 
with  Germany,  and  the  heavy  taxes  her  peo- 
ple have,  in  consequence,  to  pay,  yet  they 
do  not  emigrate  in  such  vast  numbers  as  the 
people  do  from  Germany  and  Great  Britain. 
In  none  of  our  cities  are  found  Frenchmen, 
who  have  recently  left  their  native  land,  in 
sufficient  numbers  to  become  the  ruling  pow- 
er in  the  city.  The  difference  in  the  amount 
of  the  circulating  medium  in  these  European 
countries  is  one  great  cause  of  the  great  dif- 
ference in  the  relative  contentment  of  their 
people. 

This  young  and  growing  country  needs 
relatively  more  money  for  general  circula- 
tion than  France  does.  But  France  evident- 
ly has  none  too  much.  Then  we  have  far 
too  little.  A  greater  supply  is  needed  to 
develop  the  natural  resources  of  the  coun- 
try, and  to  put  and  keep  our  manufacturing 
industries  in  motion.  To  use  what  we  have 
to  advantage  we  need  more.  It  would  be 
hard  for  a  man  to  make  his  living  on  the 
best  fai  m  with  nothing  but  his  hands.     But 


AMOUNT  OF  MONEY  NEEDED.  Ill 

give  him  team  and  tools  and  seed,  and  he 
will  have  plenty  of  produce  to  spare.  A 
vast  amonnt  of  money  is  invested  in  costly 
machinery  in  manufactories.  More  money 
is  needed  to  keep  them  in  operation  and 
to  prevent  what  is  invested  from  becoming  a 
dead  loss. 

Our  population  is  rapidly  increasing,  and 
the  Government  should  make  provision  to 
furnisli  the  nation  with  an  increase  of  money 
for  its  use  in  proportion  to  its  increase  in 
population.  The  banks  should  not  have 
the  power  to  do  this;  and  they  could  not  be 
depended  on  to  do  it  if  they  had.  As 
Andrew  Jackson  well  said,  "The  banks  can- 
not be  relied  upon  to  keep  the  currency 
uniform  in  amount."  The  people  should 
require  Congress  to  faithfully  perform  the 
duty  imposed  upon  it  by  the  Constitution, 
and  furnish  them  with  a  proper  amount  of 
good,  reliable  money. 


CHAPTER  XIII. 

"elastic  currency." 

|N  any  given  locality  more  money  is  need- 
ed at  some  seasons  than  at  others  to 
transact  its  business  with  facility.  In  some 
of  oar  counties  many  thousands  of  dollars 
are  paid  out  in  the  fall  of  the  3' ear  for  ap- 
ples, in  the  winter  for  wheat;  in  others  in 
the  spring  for  cattle,  and  wool,  and  cotton. 
Hence  some  maintain  that  the  quantity  of 
money  in  the  country  should  be  variable — 
tliat  it  should  be  easy  to  put  more  money  in 
circulation  or  to  retire  a  surplus  as  demand- 
ed by  the  fluctuations  of  trade.  Hence  it 
has  been  proposed  that  (rovernment  bonds 
bearing  a  low  rate  of  interest,  and  paper 
money  issued  by  the  Crovernment,  be  inter- 
changeable with  each  other.  Then,  if  there 
is  more  money  than  is  needed,  it  could  be 
changed  into  bonds;  if  there  is  less  than  is 
needed,  the  bends  could  be  changed  for 
money. 


"ELASTIC  CURRENCY."  113 

To  this  plausible  plan  there  are  fatal  ob- 
jections 

First,  the  prosperity  of  the  country  would 
be  at  the  mercy  of  capitalists.  They  could, 
by  combination,  expand  or  contract  the  vol- 
ume of  money  in  circulation  at  their  will. 
The  prices  of  commodities  and  the  value 
of  debts  would  be  in  their  hands.  It  would 
depend  upon  their  edict  whether  the  farmer 
would  have  to  pay  for  a  machine  which  he 
bought  on  credit  a  hundred  bushels  of 
wheat,  or  two  hundred  bushels  of  wheat. 
This  is  a  power  too  dangei  ous  to  be  placed 
in  the  hands  of  any  class  of  men.  This 
country  has  had  a  bitter  exx)erience  of  the 
readiness  of  a  favored  class  to  unsettle  val- 
ues whenever  they  can  do  it  to  their  own  ad- 
vantage. This  of  itself  is  a  sufficient  object- 
ion to  the  proposed  arrangement. 

Second,  the  National  Government  should 
not  be  in  debt.  It  should  "  owe  no  man  any 
thing."  The  paper  money  which  it  issues 
should  be  as  good  as  gold  and  silver,  but  it 
should  be  money,  and  not  a  promise  to  pay; 
therefore  it  would  not  be  a  debt. 

The  fashion  of  going  into  debt  should  not 


114  FIRST  LESSONS  ON  MONEY. 

be  set  by  tlie  supreme  authority  of  the  kind. 
States  and  cities  and  towns  are  burdened 
with  debts.  The  custom  of  going  into  debt 
for  improvements  leads  to  extravagance  and 
villainy.  Many  a  public  work  built  on. 
credit  cost  double  of  what  it  would  if  it  had 
been  paid  for  as  it  was  carried  on.  Those 
who  vote  expenditures  of  money  should  pay 
their  proportion  of  the  expenditure.  "Im- 
provements" not  needed  are  often  projected 
because  those  who  project  them  manage  to 
have  others  pay  for  them.  States  and  cities 
and  towns  are  burdened  with  debts  that 
never  should  have  been  contracted. 

It  would  greatly  improve  the  government 
of  our  cities  and  towns  if  they  were  obliged 
to  pay  their  expenses  as  they  go  along,  and 
if  their  local  elections  could  be  held  the  next 
week  after  the  payment  of  taxes. 

But  is  it  really  necessary  that  money 
should  be  '"elastic"  to  any  considerable  ex- 
tent« 

A  farmer  needs  more  teams  when  getting 
in  his  crops  than  at  other  seasons  of  the 
year.  But  he  does  not  ordinarily  buy  more 
horses.     He  works  to  the  best  advantage  all 


"ELASTIC  CURRENCY."  115 

that  he  has.  Some  of  his  teams  do  double 
the  work  that  they  do  at  other  seasons.  So, 
when  money  is  specially  needed,  it  should  be 
made  to  do  more  service  by  being  more  ac- 
tive. 

Bishop  Berkeley  pertinently  inquires, 
"Whether  six-pence  twice  paid  be  not  as 
good  as  a  shilling  once  paid  '\  " 

The  amount  of  paper  money  should  be 
kept  within  fixed  limits.  In  an  exigency, 
enough  unused  metal  suitable  for  coin  can 
be  brought    forth  to  meet  the  demand. 

It  is  said  that  Napoleon,  finding  in  a 
church  some  statues  made  of  silver,  inquired 
what  they  were.  The  priests  replied  that 
they  were  statues  of  the  twelve  apostles. 
"Then,"  said  the  Emperor,  "like  their  Mas- 
ter, they  should  be  going  about  doing 
good."  He  ordered  them  to  be  melted  up 
and  coined  into  money. 

Prof.  Frances  A.  Walker  v/rites  so  sensi- 
bly on  this  i)oint  that  we  quote  him  at  some 
length.  He  saj^s,  (Money  p.  416.)  "Those 
who  demand  that  money  shall  be  'elastic,' 
mean  b}'  this,  that  there  shall  be  more  of  it 
at  one  time  than  at  another.     Is  this  elastic- 


116  FIRST  LESSONS  ON  MONEY. 

ity?  A  rubber  band  is  elastic,  but  there  is 
no  more  of  it  at  one  time  tlian  at  another. 
It  will  cover  more  ground  at  one  time  than 
at  another,  but  it  only  does  so  by  becoming 
thinner.  There  will  be  more  of  it,  in  any 
one  place,  at  one  time  than  at  another,  but 
for  this  reason,  there  is  less  of  it  in  some 
other  place.  There  is  no  more  rubber  when 
the  band  is  stretched  than  there  was  before. 
Now,  elasticity  in  this,  the  true  sense,  be- 
longs eminently  to  metallic  money.  No  class 
of  commodities,  known  to  men,  yield  more 
quickly  under  piessure,  or  re-act  more 
promptly.  If  an  exceptional  demand  arises 
anywhere,  gold  or  silver  responds  with  an 
alacrity  which  would  be  unattainable  b}'  any 
article  not  possessing  great  value  for  its  bulk, 
and  not,  at  the  same  time  that  article  in 
which  the  values  of  all  commodities  are 
expressed  for  purposes  of  exchange.  But 
while,  in  obedience  to  economical  impulses, 
however  slight,  there  may  be  more  of  such 
money  in  anyone  place  at  one  time  than  an- 
other, the  total  amount  is  not  on  that  account, 
increased.  There  is  less  at  the  same  time  in 
some  other    places,  or  in   all   other  jilaces. 


'ELASTIC  CURRENCY."  117 

This  fact  is  essential  to  create  tliat  tension 
which  shall  make  it  certain  that,  when 
the  exceptional  demand  in  the  first  in- 
dicated place  shall  cease,  the  volume  of 
money  will  be  promptly  and  accurately 
redistributed  according  to  the  prevailing 
conditions  of  international  commerce." 

Money,  like  labor,  will  make  its  own  way  to 
any  place  where  there  is  a  special  demand  ior 
it.  It  is  nr>t  necessary  to  create  more  money  to 
meet  a  temporary  demand.  For,  as  Prof. 
Walker  says,  (Money  p.448.)  ''First.  The  peri- 
odical occasions  for  a  larger  use  of  money,  on 
the  part  of  different  trades  and  different 
localities,  go  far  to  offset  each  othei'.  The 
busy  time  of  the  mannfacturer  is  not  neces- 
sarily the  bnsy  time  of  the  agriculturist; 
lumber  and  cotton  are  not  moved  to  market 
in  the  same  season  In  the  same  way  trade 
reaches  its  height  in  different  sections  and 
countries  at  different  periods  of  the  year,  so 
that  money  may  be  doing  its  work  this  month 
in  France,  return  next  month  to  England  to 
meet  the  demands  of  Lancashire,  and  go 
two  weeks  later  to  Glasgow,  in  the  usual 
November  drain  northward,  to   satisfy   the 


118  FIRST  LESSONS  ON  MONEY. 

wants  of  the  iron  trade  of  Scotland. 

Secondly.  It  does  not  follow  from  the 
fact  that  more  exchanges  are  to  be  effected 
by  the  use  of  money  that  more  actual  pounds 
or  dollars  are  requisite.  Mone}^  is  a  quanti- 
tyof  two  dimensions, — the  number  of  pieces 
of  gold,  or  silver,  or  paper,  and  their  i  ate  of 
movement.  A  scarcity  of  money  will  first 
make  itself  felt  in  an  increased  activity  of 
what  is  on  hand.  Each  piece  will  accomplish 
more  pajments  in  the  same  time.  A'rising 
rate  of  interest  makes  the  use  of  money 
worth  more,  and  hence  it  will  not  be  allowed 
to  remain  so  long  idle  in  the  pocket  or  the 
drawer.  If  the  merchant  or  the  manufact- 
urer has  to  pay  eight  per  cent,  in  place  of 
six  for  discounts,  he  will  calculate  his  out- 
goings and  incomings  more  closely,  in  order 
to  reduce  the  average  amount  Ij^ing  in  his 
till.  He  will  deposit  more  promptly  to  se- 
cure the  higher  interest;  he  will  take  more 
pains  in  collecting  sums  due  from  his  cus- 
tomers, with  whom  the  money  might  other- 
wise have  tarried  a  day  or  a  week  Idnger. 

''Thirdly.  While  there  is  a  tendency,  in 
a  normal  condition  of  production  and  trade, 


"ELASTIC  CURRENCY."  119 

to  a  greater  demand  for  money  at  one  period 
than  at  another,  a  certain  stringency  at  such 
times  is  desirable  as  exerting  a  wholesome 
repression  upon  speculative  movements.  The 
present  industrial  and  commercial  organiza- 
tion of  the  world  powerfully  tends  to  gather 
production  into  great  waves  with  correspond- 
ing intervals  of  depression — overjDroduction 
succeeded  surely  by  stagnation.  A  certain 
wa;Ste  of  energy,  which  always  results  from 
fitful  exertions,  must  be  accepted  as  among 
the  economical  conditions  of  this  age.  But 
it  is  utterly  undesirable  that  the  tendency 
should  be  quickened  and  strengthened  by 
the  facility  of  issues  of  hjcal  origin  and  cir- 
culation." 

The  main  thing  necessary  for  this  country 
is  to  have  a  sufficient  volume  of  money,  and 
there  will  be  no  difficulty  in  meeting  a  special 
demand  in  any  pai'ticular  place. 


CHAPTER  XIV. 

DISTRIBUTION    OF    MONEY. 

^l|TONEy,  as  the  representative  of  value, 
^'  will  go  where  there  is  something  of  val- 
ue to  be  exchanged  for  it.  It  is  given  for 
labor,  and  for  the  products  of  labor  and 
skill.  The  great  centers  of  wealth  are  great 
money  centers. 

If  a  man  has  mone3^  but  engages  in  no  i-e- 
munerative  labor  or  business,  those  who  la- 
bor for  him  will,  in  time,  honestly  obtain 
his  money.  Spain,  possessed  of  the  mines 
of  Mexico  and  Peru,  the  richest  in  the 
world,  became  the  poorest  among  the  great 
nations  of  Europe;  ''owing  to  the  accumula- 
tion of  estates  in  the  hands  of  communities 
and  noble  families,  and  the  predominant  in- 
fluence of  the  Catholic  priesthood,  wl«cli 
for  centuries  had  rendered  that  line  king- 
dom little  else  than  a  cluster  of  convents 
surrounded  by  a  hardy  peasantry."  (Ali- 
son's Hist,  of  Europe,  vol.  1,  p.  168.) 


DISTRIBUTION  OF  MONEY.  131 

No  matter  how  widely  money  may  be 
scattered,  it  returns  to  those  who  own  the 
property,  as  naturally  as  running  water  re- 
turns to  the  ocean.  It  is  in  the  order  of  na- 
ture that  to  "him  that  hath  shall  be  given, 
and  he  shall  have  more  abundance." 

That  money  may  be  g^neially  distributed 
among  the  people  it  is  necessary  that  prop- 
erty, for  v^hich  money  is  given,  should  be 
distributed. 

It  is  impossible  tliat  there  should  be  an 
equality  of  property  among  a  people  free  to 
act  and  possessing  an  equality  of  rights.  If 
an  equal  division  of  the  property  of  the 
country  were  made  among  the  people,  there 
would  be  great  difference  in  the  amounts 
which  different  persons  would  possess  in  a 
year  afterward.  In  the  old  Jewish  republic, 
the  greatest  possible  ^precautions  were  taken 
that  each  family  should  possess  a  compe- 
tence. The  land  was  divided  among  them. 
Every  one  had  a  farm,  a  homestead,  in  the 
country.  If  one  was  compelled  to  sell  his  in- 
heritance, he  could  alienate  it  from  his 
family  for  only  fifty  years  at  the  longest. 
At    the   year   of    jubilee    debts   were    can- 


122  FIRST  LESSONS  ON  MONEY. 

celled  and  inlieritances  restored.  Yet  in 
their  palmiest  daj/s  tliey  liad  their  poor 
among  them.  But  they  had  none,  while  the 
republic  lasted,  enormously  rich,  and  prob- 
ably none  who  suffered  from  poverty.  All, 
while  obedient  to  God,  were  in  comfortable 
circumstances. 

It  is  better  for  the  families  and  better  for 
the  country  in  every  respect,  that  the  farms 
be  owned  by  the  persons  working  them,  than 
that  one  man  own  a  county,  and  all  the 
other  men  in  it  work  for  him.  The  few  im- 
mense farms  in  the  ISTorthwest  are  a  curse  to 
the  community  in  which  they  are  situated. 
No  pleasant  homes  are  made.  Schools  and 
churches  are  not  founded  and  sustained. 
The  farms  are  worked  by  tramps  and  va- 
grants who  leave  the  country  as  soon  as  the 
season  is  over,  and  they  get  their  pay. 

The  sole  interest  the  owners  feel  in  their 
farms  is  to  make  all  the  money  off  from 
them  that  they  possibly  can.  They  put  on 
as  little  as  possible  and  take  off  all  that  is 
possible. 

Grood  order  and  general  prosperity  prevail 
in  our  cities  in  proportion  as  the  business  is 


DISTRIBUTION  OF  MONEY.  123 

divided  up  amono;  the  inhabitants.  The 
greater  the  proiDortion  of  men  who  work 
for  others,  the  greater  danger  there  is 
of  riotous  disturbances.  It  is  as  ad- 
vantageous to  the  city,  as  it  is  to  the 
^country,  to  have  the  property  and  the  busi- 
iTess  divided  up  among  a  large  number  of 
owners. 

In  this  countr}^  there  are  two  strong  rea- 
sons -why  every  provision  consistent  with 
the  rights  of  all  should  be  made  for  the  gen- 
eral distribution  of  money  among  the  peo- 
ple. 

First,  oiLT  laws  establish  moMhood  suff- 
rage. In  deciding  who  shall  rule  over  us, 
one  is  given  as  much  influence  as  another. 
The  millionaire  casts  no  mightier  a  ballot 
than  the  pauper.  In  feudal  times,  w^hen  one 
was  made  a  lord  he  was  given  an  ample  do- 
main to  maintain  his  dignity.  So,  now, 
those  who  determine  what  jDrotection  shall 
be  given  to  property,  should  have  some 
property  to  protect.  When  it  gets  to  the 
point  that  one  class  of  men  vote  taxes  which 
another  class  of  men  are  comj)elled  to  pay, 
the  Government  will  be  little  better  than  a 


124  FIRST  LESSONS  ON  MONEY. 

legalized  conspiracy  against  private  as  well 
as  public  property. 

Second,  the  State  provides  the  means  of 
education  for  all  the  people.  It  is  expected 
that  all  born  on  American  soil  shall  be  en- 
lightened. Any  one,  no  matter  what  may 
be  his  condition,  may  obtain,  if  he  has  the 
determination  and  the  ability,  a  respectable 
education.  It  is  often  the  case  that  the 
young  man  who  works  out,  is  better  educa- 
ted than  the  man  who  employs  him.  His 
tastes  and  instincts  are  higher.  A  people 
thus  educated,  ]srEp:D  money  to  purchase  the 
comforts  and  conveniences  of  life  which 
have  become  a  necessity  to  them.  They 
cannot  be  happy  and  contented  in  a  condi- 
tion of  poverty  that  might  be  endurable  by 
a  people  who  never  possessed  their  advan- 
tages. The  Government,  in  giving  the 
masses  education,  obligates  itself  to  afford 
them  all  reasonable  facilities  for  acquiring 
the  competence  which  it  has  fitted  them  to 
enjoy,  and  to  keep  them  from  that  biting 
poverty  which  it  has  unfitted  them  to  en- 
dure. 

He  who  teaches  the  savage  to  gain  his   liv- 


DISTRIBUTION  OF  MONEY.  125 

ing  with  the  plow  and  hoe,  instead  of  with 
the  bow  and  arrow,  should  render  it  possible 
for  him  to  obtain  the  j)low  and  hoe.  If  the 
nation  educates  the  people  so  that  good 
clothes  and  comfortable  houses  are  a  necessi- 
ty, then  it  should  render  it  possible  for  them 
to  obtain  good  clothes  and  comfortable 
houses. 

The  very  least  that  our  Government  can 
do,  with  safety,  is  to  give  to  all  its  citizens, 
as  far  as  possible,  an  equal  facility  for  ma- 
king money.  There  should  be  no  favorites; 
there  should  be  none  proscribed. 

France  was  able  to  put  down  her  commu- 
nistic war,because  the  great  mass  of  her  peo- 
ple are  property  holders.  It  pays  the  Ger- 
man war  indemnity,  and  thrives  under  it, 
better  than  Germany  does  in  receiving  it, 
because  all  her  people  have  money.  It  has, 
as  we  have  seen,  more  money  in  proportion 
to  its  population  than  any  other  nation  in 
the  world. 

There  is,  in  France,  compared  with  other 
nations,  a  remarkably  equal  distribution  of 
property  among  her  people.  This  is  owing 
largely  to  the  nature  of  her  laws. 


3  26  FIRST  LESSONS  ON  MONEY. 

The  tendency  of  our  laws  is  in  the  ojDpo- 
site  direction.  Under  their  influence,  the  rich 
are  made  richer,  and  the  poor  poorer.  There 
have  probably  been  more  vast  fortunes  ac- 
cumulated in  the  United  States  during  the 
last  quarter  of  a  century  than  in  any  other 
nation  of  the  world.  This  has  been  done  under 
the  operation  of  laws  fostering  it.  The  favor- 
able conditions  created  by  law  have  contrib- 
uted largely  to  this  result.  All  such  laws 
should  be  changed. 

These  ^ast  accumulations  of  fortune  in  the 
hands  of  a  few  are  detrimental  and  danger- 
ous to  the  people  at  large.  They  are  not 
obtained  by  honest  industry  or  beneficent 
skill.  The  farmer  who  raises  a  thousand 
bushels  of  wheat,  or  the  manufacturer  Avho 
makes  a  thousand  yards  of  cloth,  adds  so 
much  to  the  actual  wealth  of  the  country. 
But  he  who,  in  carrying  their  wheat  to  the 
market  takes  from  each  of  ten  thousand 
farmers  ten  bushels  of  wheat  more  than  his 
services  are  actually  worth,  simpl37-  enriches 
himself  at  their  expense.  Thousands  are  de- 
prived of  needed  comfoi-ts  that  he  may  revel 
in  luxury.       Discontent   and   anarchy  are 


DISTRIBUTION  OF  MONEY.  127 

created.  Now  and  then,  riots  break  out  as 
an  indirect  result  of  the  unequal  distribution 
of  gains  among  tho^e  by  whose  labor  they 
were  made.  The  way  is  gradually  being 
paved  to  a  terrible,  communistic  war.  All 
laws  which  specially  favor  the  gaining  and 
the  holding  of  great  fortunes  should  be 
changed.  Among  such  laws  are  those  relat- 
ing to 

1.  The  gift  of  franchises.  A  company 
of  men  are  given  by  statute  the  right  to  build 
a  railroad  through  other  men's  lands.  This 
right  is  one  created  by  law.  It  is  not  one  of 
the  Jura  natura — natural  rights  of  mankind- 
It  is  an  interference  with  the  rights  of  many 
for  the  benefit  of  a  few,  under  the  plea  that 
it  is  for  the  public  good.  It  is  conferred 
by  the  state  by  positive  enactments,  and 
should  be  regulated  by  the  state.  A  rail- 
road or  a  ferry  is  not  private  property  in  the 
sense  that  a  farm  or  a  house  is  private  prop- 
erty. All  franchises  given  hy  the  state 
should  he  distributed  hy  the  state.  The  men 
who  make  themselves  rich  from  one  fran- 
chise should  not  be  allowed,  out  of  its  prof- 
its, to  buy  uj)  others  that  come  in  competition 


128  FIRST  LESSONS  ON  MONEY. 

with  it.  For  example,  there  should  be  a 
constitutional  enactment  which  would  pre- 
vent the  owners  of  the  New  York  Central 
Railroad  from  owning  any  interest  in  the 
Erie  or  the  West  Shore.  Let  the  special 
privileges  which  the  state  gives  be  divided 
among  many.  Because  one  man  has  been  given 
an  advantage  over  the  rest  of  the  community 
that  is  no  reason  why  he  should  be  given 
another. 

When  a  sufficient  amount  has  been  realized 
from  a  franchise  to  pay  for  all  that  has  been 
expended  in  rendering  it  productive,  and  a 
reasonable  profit  in  addition,  it  should  then 
revert  to  the  state.  Corporations  created  by 
the  state,  and  endowed  with  special  privi- 
leges by  it,  should  not  be' allowed  to  go  on, 
and  out  of  the  comm.unity  at  large,  pile  up 
wealth  indefinitely  for  the  individual  bene- 
fit of  those  who  may  be  in  control.  Such 
privileges  are  dangerous.  They  will  make 
trouble.  Already  in  some  of  the  states  it  is 
said  that  the  railroad  corporations  control 
the  successive  Legislatures,  whether  they  be 
Republican  or  Democratic,  in  all  matters 
affecting    their    interests,  as    absolutely   as 


DISTRIBUTION  OF  MONEY.  139 

they  do  their  engineers  and  conductors. 
The  change  of  the  party  in  power  does  not 
change  the  policy  of  the  state  towards  these 
wealtliy  corporations.  Enactments  are  made 
giving  them  advantages  which  would  be  con- 
sidered as  little  better  than  grand  or  petit 
larceny  in  other  kinds  of  business.  It  is 
time  that  a  stop  was  put  to  the  making  of 
laws  in  the  interests  of  rich  corporations 
against  the  common  rights  of  the  people. 
The  hard-working  farmers  in  some  of  the 
most  productive  sections  of  our  country  are 
kept  poor  by  the  exactions  of  the  raiboads 
on  which  they  depend  to  get  their  produce 
to  the  market. 

2.  Joint  Stock  Companies.  The  laws 
creating  and  governing  these  popular  com- 
panies appear  to  be  made  wholly  in  the  in- 
terest of  the  rich  and.  the  unscrupulous. 

One  who  owns  or  controls  a  majority  of 
the  stock  has  as  absolute  control  as  if  he 
owned  the  whole.  He  d>ecides  who  shall  be 
the  officers  and  what  shall  be  their  salaries. 
He  makes  sales  or  mortgages  at  his  will. 

A  railroad  is  projected.  People  living 
along    the    line    are   urged   to   take  stock. 


130  FIRST  LESSONS  ON  MONEY. 

Many  do  so.  The  road,  when  completed,  is 
successful.  But  it  is  mortgaged,  ostensibly 
to  raise  money  to  pay  floating  debts.  In 
due  time  it  is  sold  under  the  mortgage,  and 
the  small  stockholders  lose  every  dollar  they 
put  in.  It  is  said  that  the  only  ones  who 
did  not  come  out  millionaires  from  building 
one  of  our  great  railroads  were  those  who 
had  paid  up  their  subscriptions  for  stock. 

The  inhabitants  of  a  thriving  town  are 
persuaded  that  it  would  add  greatly  to   the 
business  of  the  place  and  to  the  value  of  the 
property  in  it,  to  have  a  smelting  furnace,  or 
a  sewing  machine  factory,  or    agricultural 
works.      All  who   can    be,   are    influenced 
to    take    stock  in   the  new  enterprise.     It 
succeeds  even  better    than    was  expected. 
But  those  who  have  a  controlling  interest 
are    not     satisfied    with     their     large    sal- 
aries and  large  profits.     They  desire  to  ab- 
sorb the  whole.     They  adopt  a  system  of  an- 
noyance which   the  laws  render  not   only 
possible  but  easy,   and  compel   the  small 
stockholders  to  sell  out  on  such  terms  as 
those  having  a  controlling  interest  may  dic- 
tate.    In  this  way  aged  men  and  women  who 


DISTRIBUTION  OP  MONEY.  181 

had  saved  enough  to  make  them  comfortable 
and  were  anxious  to  make  a  profitable  in- 
vestment have  lost  all  their  money.  The 
laws  governing  joint-stock  companies  should 
be  so  amended  as  to  protect  the  rights  of 
small  stockholders. 

3.  Stock  Gamhliiig.  Many  large  for- 
tunes are  made  by  manipulating  stocks. 
But  where  one  makes,  many  others  lose. 
Where  one  becomes  a  millionaire,  thousands 
are  reduced  to  poverty.  It  is  a  great  loss  to 
to  a  country,  when  the  sharpest,  most  far- 
seeing,  capable  men,  instead  of  engaging  in 
some  useful  pursuit,  devote  all  their  ener- 
gies to  gambling. 

A  man  buys  a  million  bushels  of  wheat 
to  be  delivered  in  three  months.  Neither  of 
the  parties  to  the  transaction  owns  a  bushel 
of  wheat  and  does  not  expect  to.  When  the 
time  for  delivering  the  wheat  comes,  if  the 
market  price  is  higher  than  it  was  when  the 
purchase  was  made,  the  seller  pays  the  dif- 
ference; if  it  is  lower  the  purchaser  pays  the 
difference.  The  whole  transaction  is  simply 
a  bet  that  wheat  will  be  worth  so  much  at  a 
given  time.     Stocks  are  bought  in  the  same 


132  FIRST  LESSONS  ON  MONEY. 

» 
way.     All   sucli   trading  in  margins  should 
be  strictly  prohibited  by  law. 

4.  Monopolies.  Brain  work  is  entitled 
to  its  jnst  compensation  as  really  as  manual 
labor.  He  who  invents  any  thing  useful 
should  be  recompensed  for  his  invention. 
Hence,  our  laws  on  patents  give  to  the  pa- 
tentee of  any  article  a  mono^Dly  for  its  manu- 
facture and  sale  for  a  limited  number  of 
years.  He  can  fix  his  owij  price  and  shut 
out  all  competition.  The  profits  on  some 
patented  articles  are  simply  enormous.  He 
who  started  poor  becomes  in  a  few  years  a 
millionaire. 

The  same  law  that  creates  a  monopoly 
should  fix  a  reasonable  limit  to  the  amount 
that  may  be  realized  from  it.  When  that 
amount  is  reached,  the  monopoly  should 
terminate,  and  the  public  reap  the  benefit  of 
tue  invention.  No  unnatural  facilities 
should  be  afforded  by  the  law  to  take  money 
from  the  many  for  the  benefit  of  the  few. 
In  all  ages  monopolies  have  been  a  source  of 
dissatisfaction  and  contention.  Every  thing 
tending  to  create  or  maintain  a  monopoly 
should  be  looked  upon  with   a  jealous  eye. 


DISTRIBUTION  OF  MONEY.  133 

"Monopolies."  says  Adam  Smith,  "de- 
range more  or  less  the  natural  distribution 
of  the  stock  of  the  society.''  \^ Wealth  of 
Nations,  p.  493.)  • 

Many  of  the  bad  results  of  monopolies  are 
produced  by  the  combinations  which  at  pres- 
ent are  so  popular.  Nearly  all  the  great  pro- 
ductive industries  of  the  country,  except  the 
agricultural,  are  combined.  There  is  a  sys- 
tematic interference  with  the  law  that  prices 
should  be  regulated  by  supply  and  demand. 
Whenever  this  interference  prevails,  disas- 
trous results  are  sure  to  follow.  The  prices 
of  manufactured  articles  are  generally  regu- 
lated by  the  arbitary  agreements  of  the  manu- 
facturers. The  price  of  the  article  in  question  is 
put  a  little  lower  than  it  could  be  sold  in  our 
market  if  bought  in  Europe,  and  the  amount 
which  must  be  paid  for  duties  and  transpor- 
tation added.  But  little  reference  is  had  to 
its  cost  here. 

The  workmen,  perceiving  that  they  do  not 
have  their  share  of  the  products  of  their  labor, 
follow  the  example  of  their  employers,  and 
foim  combinations  to  secure  larger  prices  for 
less  labor.  Fierce  anlagonisms  are  provoked, 


134  FIRST  LESSONS  ON  MONEY. 

and  business  derangements  and   family  suf- 
erings  follow. 

The  actual  cost  of  mairafacturing  goods  in 
this  counfry,  under  our  present  system,  is 
such  tiiat  we  cannot,  to  any  great  extent, 
compete  with  other  nations  where  we  meet 
npon  an  equal  footing.  But  such  are  our 
natural  advantages  that  we  ought  to  be  able 
to  undersell  all  other  manufacturing  and 
commercial  nations.  We  havo  water  power 
sufficient  to  run  all  the  machinery  of  the 
world.  Our  mines  of  iron  an  I  coal  are  ap- 
parently inexhaustible,  and  are  easily 
reached.  Cotton,  and  wool,  and  lumber,  and 
other  law  materials  are  produced  in  abun- 
dance. We  can  furnish  supplies  of  food  to 
feed  all  who  come.  Our  great  rivers,  and 
lakes,  and  numerous  railroads  furnish  every 
facility  for  cheap  transportation.  Yet  with 
all  these  advantages, our  trade  with  our  next 
door  neighbors  in  Mexico  and  Central  Amer- 
ica and  South  America  is  small.  They 
depend  mainly  upon  Europe  for  their 
manufactured  goods.  We  are  pretty 
nearly  shut  out  of  the  market  of  the 
world.     This  is   brought  about   by  purely 


DIxSTRIBUTION  OF  MONEY.  135 

artificial  means  which  have  the  effect  of 
monopolies  in  raising  prices  above  the  nat- 
ural standard.  As  a  result,  our  manufac- 
turers are  obliged  to  depend  almost  wholly 
upon  the  home  market.  But  the  same  cause 
limits  the  abilit}^  of  the  purchasers  in  the 
home  market,  to  buy.  Their  purchases 
would  be  much  larger  if  they  had  the  means 
with  which  to  pay. 

Suppose  a  dozen  families  live  on  a  remote 
island,  shut  off  from  all  communication  with 
the  rest  of  the  world.  One  half  of  them  are 
mechanics,  and  one  half  farmers.  The  me- 
chanics combine,  and  say  that  their  labor  is 
skilled  labor.  They  will  therefore  require 
two  days  work  of  the  farmer  for  one  of  their 
own.  If  this  agreement  is  carried  out,  the 
mechanics  must,  of  necessity,  lie  still  half 
the  time.  There  is  no  help  for  it.  This  is 
essentially  the  state  of  things  in  this  coun- 
try. About  one  half  the  people  are  farmers. 
Every  one  of  them  could  use  a  thousand  dol- 
lars worth  of  goods  a  year  if  he  had  the  means 
with  which  to  buy  them;  but  as  he  has  not,  he 
can  get  along  with  a  much  smaller  amount. 

Those  who  make  his  tools,  and   furniture, 


136  FIRST  LESSONS  ON  MONEY. 

and  clotli  have  procured  the  ^enactment  of 
laws  that  com  pel  Jiim  to  buy  his  supplies  of 
them.  Then*  by  combining  together,  they 
compel  him  to  give  the  product  of  two  or 
more  days  of  his  labor  for  the  product  of  one 
day's  labor  of  their  own.  iet,  as  farms 
and  factories  are  now  carried  on,  the  farm 
labor  is  of  the  two,  skilled  labor.  It  takes  a 
longer  time  to  learn  to  run  a  farm  success- 
fully than  it  does  to  learn  to  i  un  a  machine  in 
a  man u factory. 

On  an  average,  the  farmer  gives  more  than 
two  days  of  his  labor  to  pay  for  one  day's 
labor  of  the  man  who  made  the  goods  he  buys. 
Hence  this  man  must  go  unemployed  more 
than  half  the  time.  It  is  unavoidable.  Every 
autumn,  it  is  confidently  asserted  that  there 
is  to  be  a  revival  of  business  because  there 
is  an  abnndant  harvest.  But  business  does 
not  revive.  Thousands  go  unemployed,  a 
large  poition  of  the  time.  There  will  be  a 
comparative  stagnation  of  business  as  long  as 
these  two  conditions  exist.  First,  while  the 
currency  is  being  cont]-acted  from  year  to 
year.  Second,  while  the  equilibrium  of 
prices  is  destroyed  by  artihcial  combinations 


DISTRIBUTION  OF  MONEY.  13t 

which  amount  to  a  monopoly.  We  may 
have  every  other  element  of  prosperity  but 
w^hile  these  two  causes  continue  in  operation 
the  wheels  of  business  will  drag  heavily. 

It  is  sought  to  justify   these   substantial 
monopolies  on  the  ground  that  they  are  in 
the   interest   of  our   workmen,    and  are   in- 
tended   to   protect   them   from    competiiion 
with  the  pauper  labor  of  Europe.      But  mo- 
nopolies are  not  intended  for  the  protection 
of  laborers.     As  Adani   Smith  justly  says, 
"It  is  the  indusliy  which  is  carried  on  for 
the  benefit  of  the  rich  and  the  powerful  that 
is  principally  encouraged  by  our  mercantile 
system.     That   which   is  carried  on  for  the 
poor  and   the  indigent,  is  too  often   either 
neglected  or  oppressed."  (Wealth  of  Nations 
p.   604.)      The   workingmen   in    the   woolen 
manufactories  of  England  receive  much  bet- 
ter wages  now  than' they  did  when  the  im- 
portation of  woolen  cloths  from  .nny  foreign 
countiy    was    absolutely    prohibited,    and 
when,  by   the    8tli  E!iz.,    chap.  3,  "The   ex- 
porter of  sheep,  lambs,-  or  rams,  was  for  the 
first  offence  to  forfeit  all  his  goods   forever, 
to  suffer  a  year's  imprisonment,  and  then  to 


I3S  FIRST  LESSONS  ON  MONEY. 

have  his  left  liand  cut  off  in  a  market  town 
upon  a  market  day,  to  be  there  nailed  up; 
and  for  the  second  offence  to  be  adjudged  a 
felon,  and  to  suffer  death  accordingly." 
(Ibid  507.)  The  best  encouragement  that 
can  be  given  to  manufacturers  is  to  furnish 
them  with  a  plenty  of  prompt  paying  con- 
sumers. "Consumption  is  the  sole  end  and 
purpose  of  all  production;  and  the  interest 
of  the  producer  ought  to  be  attended  to, only 
so  far  as  it  may  be  necessary  for  promoting 
that  of  the  consumer!  The  maxim  is  so  per- 
fectly self-evident  that  it  would  be  absurd 
to  attempt  to  prove  it.  But  in  the  mercan- 
tile system,  the  interest  of  the  consumer  is 
almost  constantly  sacrificed  to  that  of  the 
producer;  and  it  seems  to  consider  produc- 
tion, and  not  consumption,  as  the  ultimate 
end  and  object  of  all  industry  and  com- 
merce." (Ibid  p.  517.)  '  Monopolies,  what 
ever  may  be  their  form,  operate  against  the 
welfare  of  the  community  at  large. 

5.  Laws  of  IrJier/'tance.  In  nations 
which  have  a  hereditary  nobility  it  is  consis- 
tent that  the  heir  to  the  title  should  be  the 
heir  to  the  bulk  of  the  property.  In  England 


DISTRIBUTION  OF  MONEY.  139 

the  eldest  son  is  the  heir.  The  law  that  se- 
cures this  is  called  "The  law  of  Primogeni- 
ture. ' '  It  originated  under  the  feudal  system, 
in  the  dark  ages.  Landed  property  was 
given  to "  men  renowned  in  arms,  and  was 
held  on  condition  of  tiieir  rendering  military 
services  to  their  chief.  When  the  father 
died,  the  eldest  son  was  generally  best  fitted 
to  take  his  place  on  the  field  of  battle.  "The 
eldest  son,"  says  the  Hon.  G.  C.  Brodrick, 
in  "Law  of  Primogeniture,"  "therefore,  was 
invested  with  his  exceptional  privileges  under 
the  feudal  system,  not  because  he  was  sup- 
posed to  have  any  exceptional  rights,  but 
rather  because  he  was  supposed  to  be  the 
most  eligible  for  the  performance  of  excep- 
tional duties."  In  England  this  developed 
into  the  Law  of  Primogeniture.  By  this  law 
and  that  of  "Entail,"  large  estates  are  kept 
in  the  same  families,  especially  in  those  of 
the  nobility,  from  generation  to  generation. 
But  such  laws  are  not  popular  with  the  com- 
mon people.  The  writer  last  referred  to 
says,  "Rich  capitalists  who  do  not  invest  in 
land,  or  aspire  to  found  a  county  family, 
seldom  make  an  'eldest  son,'  (that  is  chief 


140  FIRST  LESSONS  ON  MONEY. 

heir)  and  of  those  who  do  indulge  this  am- 
bition, some  prefer  to  buy  a  moderate  estate 
for  each  of  their  sons.  Still  more  habitually 
is  equal  division  recognized  as  the  dictate  of 
natural  equity  by  the  great  body  of  mer 
chants,  tradespeople,  and  professional  men, 
as  well  as  by  the  laboring  classes  through- 
out Great  Britain  and  Ireland;  in  short,  by 
the  middle  and  lower  orders  of  society, 
'divorced  from  the  soil'  in  this  country,  and 
by  the  landless  members  of  the  upper  co- 
ders."    (Land  Tenure  p.  374.) 

The  founders  of  our  government  were 
aware  of  the  incompatibility  of  large  heredi- 
tary fortunes  with  free  institutions.  They 
endeavored  to  guard  against  them  by  abolish- 
ing the  Law  of  Primogeniture  and  the  law  of 
Entail.  But  experience  proves  that  this  is 
not  sufficient.  We  need,  in  addition,  some 
thing  like  the  French  law  of  succession. 
This  law  "limits  the  parental  power  ot  testa- 
mentary disposition  over  property  to  a  part 
equal  to  one  child's  share,  and  divides  the 
remainder  among  the  children  equally." 
(Land  tenure,  p.  290.)  If  there  are  five  chil- 
dren, the  property  is  divided  into  six  i)arts. 


DISTRIBUTION  OF  MONEY.  141 

In  any  event  each  of  the  five  cliildren  gets 
one  of  these  parts.  The  parent  can  dispose 
of  but  one  of  these  parts  by  will.  This  right, 
it  is  said,  is  seldom  exercised.  In  France, 
the  law  also  favors  the  transfer  of  land  by 
purchase.  "S^ 

As  a  consequence  of  the  law  dividing  es- 
tates upon  the  death  of  the  owner,  and  the 
law  enabling  one  to  purchase  land  at  but 
little  cost  for  transferi-ing  the  title,  the  com- 
mon people  hav^e  generally  become  land 
owners.  It  is  said  that  there  are  in  England 
two  hundred  and  fifty  thousand  owners  of 
real  estate; — in  France,  from  four  to  five 
millions.  The  j)f^pl6  ^r®  prosperous  and 
contented  to  a  degree  not  found  in  any  other 
nation  of  Europe.  ''Those  who  have  stud- 
ied the  condition  of  the  French  cultivators 
not  merely  in  books,  but  in  their  own  coun- 
try, and  who  have  witnessed  the  improve- 
ments which  have  taken  place  in  it  and  in 
their  cultivation  year  after  year,  will  proba- 
bl}^  regard  the  number  with  a  feeling  of 
satisfaction.  One  thing,  at  least,  is  estab- 
lished by  it,  that  propert}^  in  land  is,  in 
France,  a  national  possession;  that  the  terri- 


H2  FIRST  LESSONS  ON  MONET. 

tory  of  the  nation  belongs  to  the  nation,  and 
that  no  national  revolution  can  take  place 
for  the  destruction  of  private  property." 
(LandTeuure,  p.  289.) 

Our  laws  should  make  provision  for  the 
breaking  up  of  great  estates  upon  the  death 
of  ti^  owners.  The  steady  aim  of  our  Gov- 
ernment should  be  to  afford  to  all.  every 
just  and  proper  facility  for  acquiring  a  mod- 
erate competence.  To  do  this,  the  whole 
bent  of  our  laws  must  be  unfavorable  to  the 
acquisition  of  a  vast  amount  of  pioperty  by 
any  one  person,  and  to  the  handing  of  it 
down  unbroken  from  generation  to  genera- 
tion. 


CHAPTER  XV. 

HOW  TO  MAKE  MONEY. 

T  is  a  gross  caricature  of  Christianity  to 
represent  that  it  teaches  that  happiness 
in  the  future  woi'Jd  is  to  be  secured  by  neg- 
lecting the  duties  which  we  owe  to  our  fal- 
low men  in  the  present  world.  It  teaches 
quite  the  contrary.  It  insists  upon  the 
faithful  performance  of  all  the  duties  we 
owe  to  others  in  every  relation  of  life.  Nor 
is  the  proliibition  to  lay  up  for  ourselves 
treasures  on  earth  any  exception.  We  must 
provide  for  our  own  wants,  so  as  not  to  be 
chargeable  to  any;  but  we  must  not  heap  up 
riches  that  can  do  us  no  good.  "But  if  any 
provide  not  for  his  own,  and  specially  for 
those  of  his  own  house,  he  hath  denied  the 
faith  and  is  worse  than  an  infidel."— 1  Tim. 
5:  8. 

It  is  right,  then  for  any  man  to  secure  a 
moderate  competence.  How  nia^;-  it  be  done 
honestly  and  in  the  fear  of  God  \ 


144  FIRST  LESSONS  ON  MONEY. 

Perhaps  a  better  business  manual  cannot 
be  found  than  the  book  of '  Proverbs.  It 
contains  practical  directions  which,  if  fol- 
lowed out,  can  hardly  fail  of  securing  suc- 
cess in  business. 

We  offer  a  few  suggestions  to  those  who 
would  make  money  in  a  way  consistent  with 
their  happiness  in  this  world  and  in  tlie 
world  to  come. 

1.  Do  not  aim  at  getting  rich  Money 
is  valuable,  onlj^  as  a  means  to  secure  some 
worthy  end.  It  is  useful,  only  because  of 
what  it  can  secure.  Money  is  neither  food 
nor  clothing.  Midas,  at  whose  touch  every 
thing  turned  to  gold,  was  obliged,  in  order 
to  keep  from  starving,  to  beg  to  have  the 
coveted  gift  recalled.  The  favor  of  God,  an 
upright  character,  good  health,  confiding 
friends,  go  farther  than  riches  towards  secur- 
ing happiness.  These,  money  cannot  buy. 
Not  the  slightest  sacrifice  of  any  of  these 
should  ever  be  made  for  the  sake  of  making 
money.  The  aim  should  be  to  do  our  duty 
to  God,  to  our  fellow  men,  and  to  ourselves. 
If  this  is  faithfully  done,  a  competence  will 
ordinarily  follow  in  the  order  of  events.     But 


HOW  TO  MAKE  MONEY.  145 

if  one  bends  his  enei-gies  to  money-making, 
he  is  in  great  danger  of  sacrificing  something 
more  valuable  than  money  in  order  to  obtain 
it.  ''But  they  that  will  be  rich  fall  into 
temptation  and  a  snare,  and  into  many  fool- 
ish, and  hurtful  lusts,  which  drown  men  in 
destruction  and  perdition,"      1  Tim.  6:  9. 

2.  Be  diligent  in  business .  Man  was 
made  for  w^ork.  His  constitution  fits  him 
for  it.  His  health  requires  it.  We  have  no 
right  to  place  ourselves,  or  others,  not  even 
our  children,  in  a  condition  in  which  there  is 
no  need  of  working.  Those  who  make  the 
pursuit  of  pleasure  the  business  of  life,  are, 
as  a  class,  both  useless  and  unhappy.  "Six 
days  shalt  t  ou  labor  and  do  all  thy  work,'' 
is  as  binding  as  the  other  ]:)art  of  the  com- 
mand, ''Remember  the  Sabbath  day  to  keep 
it  holy." 

"When  I  was  a  boy,''  said  a  successful 
merchant,  "I  was  set,  with  another  boy,  to 
watch  my  grandfather's  sheep  on  the  moun- 
tains of  Vermont.  The  other  boy  was  in- 
tent on  amusing  himself.  I  had  to  look 
after  the  sheep.  I  complained  to  my  giand- 
father.     He   heard   me   patiently   and    then 


146  FIRST  LESSONS  ON  MONEY. 

said,  'Never  mind.  You  mind  the  sbeep 
and  you  will  own  the  sheep.'  1  thought  it 
over.  What  can  he  mean?  I  own  the  sheep? 
It  seemed  impossible.  But  I  did.  He  gave 
me  one.  I  added  to  it,  and  while  I  was  yet 
a  young  boy  I  owned  a  flock.  I  learned 
thus  early  that  to  own  a  business  one  must 
attend  to  the  busiKess." 

Let  a  young  man  of  good  ability  work  for 
others.  If  he  is  steady  and  industrious  and 
looks  faithfully  after  the  interest  of  his  em- 
ployers as  if  the  business  were  his  own,  he 
will,  in  a  few  years,  probably  have  an  inter- 
est in  the  business. 

The  wages  which  one  receives  are  a  second- 
ary matter.  High  wages  do  not  of  necessity 
furnish  the  means  to  own  a  home.  Right 
around  us  are  tine,  costly  farms,  owned  by 
men  yet  in  their  prime,  who  began  by  work- 
ing out  by  the  month  on  a  farm.  They 
never  received  high  wages.  They  began 
perhaps  at  ten  dollars  a  month,  and  never 
received,  except  for  a  few  days  in  harvest, 
over  a  dollar  a  day.  While  they  worked 
out,  their  wages  would  not  average  that. 
But  they   were   faithful.       In   a   few   years 


HOW  TO  MAKE  MONEY.  147 

the}^  saved  enough  to  enable  them  to  work 
a  farm  on  shares.  Tiiey  laid  by  enough  to 
make  a  good  payment  down,  and  then 
bought  a  farm,  and  in  a  few  years  finished 
paying  for  it. 

Many  a  large  business  concern  is  owned 
by  men  who  began  in  it  poor.  ''''He  becometh 
poor  that  dealeiJi  with  a  slack  hand;  hut  the 
hand  of  the  diligent  mal-eth  ricJiy — Prov. 
10.  4.  "Seest  thou  a  man  diligent  in  his 
business?  he  shall  stand  before  kings;  he 
shall  not  stand  before  mean  men."  —  Prov. 
22:  29. 

3.  Be  careful  about  going  into  debt. 
Never  go  into  debt  for  any  thing  that  will 
not  stand  as  security  tor  the  debt,  and  which 
will  not  furnish  j^ou  with  means  to  pay  it. 
Live  within  your  income,  no  matter  how 
small  that  may  be.  Wear  the  old  hat,  and 
the  old  coat  until  you  can  pay  for  anew  one. 
If  you  are  working  for  wages  lay  by  some- 
thing regularly  '^.ut  of  your  wages.  Ordi- 
narily you  can  do  this,  if  you  will.  If  you 
rent  a  house,  buy  one  as  soon  as  you  have 
saved  enough  to  make  a  payment,  and  then 
pay  towards  it  every  tfionth  what  you  would 


148  FIRST  LESSONS  ON  MONEY. 

otherwise  pay  for  rent.  In  such  a  case,  it  is 
not  so  much  j^our^elf  as  the  property  that  is 
incumbered  with  debt.  Avoid  all  mere  spec- 
ulations. Have  nothing  to  do  with  stock 
gambling  and  dealing  in  margins.  But  it  is 
proper,  and  often  wise,  to  buy  real  estate 
if  the  income  from  it  will  pay  interest  and 
taxes,  as  it  is  altogether  probable  that  it 
will  rise  in  value. 

4.  Never  hecome  responsible  for  the  debts 
of  others.  Many,  who,  by  industry  and 
frugalit}^  had  laid  by  a  competence,  have  in 
their  old  age,  been  reduced  topoveity  by  in- 
dorsing for  others.  Mr.  Forester  and  his 
wife  came  from  England  thirty  years  ago. 
He  worked  in  a  mill,  bought  him  a  pleasant 
home  of  a  few  acres,-  and  had  enough  money 
laid  by  so  that  they  could  live  comfortably 
the  rest  of  their  daj^s.  He  then  retired  from 
business.  An  old  friend  from  the  same 
neighborhood  in  England  owned  the  next 
farm  to  his.  They  had  been  intimate  for 
years.  This  old  fiiend  wanted  him  to  sign 
a  note  of  eight  thousand  dollars  with  him  for 
three  months.  He  yielded  to  his  persuasions. 
The  man  for  whom   he  signed  had   secretly 


HOW  MA.KE  TO  MONEY.  149 

put  liis  property  out  of  his  hands,  and  the 
indorser  had  the  note  to  pay.  His  home  was 
sold  on  execution,  every  thino;  that  the  law- 
could  take  was  taken;  and  now,  nearly  eighty 
years  old  he  gets  such  jobs  to  do  as  he  can, 
and  his  aged  wife  goes  out  washing  to  keep 
from  starving. 

My  friend,  Mr.  Gilroy,  was  a  prosperous 
farmer.  His  farm  was  near  town,  had  been 
brought  to  a  high  state  of  cultivation  and 
had  become  valuable.  He  had  good  build- 
ings and  was  out  of  debt.  His  sons  were 
well  educated  young  men,  full  of  ambition 
and  enterprise.  They  could  not  wait  to  get 
rich  in  the  old,  plodding  way.  They  engaged 
in  large  busitiess  enterprises,  and  got  their 
father  to  indorse  for  them.  They  drew  him  in 
gradually;  and  then,  to  save  what  he  had 
risked,  he  risked  more.  In  a  few  years  they 
were  all  left  penniless.  The  pressure  upon 
him  was  too  great,  his  health  gave  way,  and 
he  wentdown  in  sorrow  to  an  untimely  grave. 

If  you  wish  to  help  a  friend,  by  giving 
him  a  sum  of  money,  do  so,  if  you  can  afford 
to.  But  do  not  indorse  for  any  one  for  an 
amount  that  you  cannot  lose  without  distress- 


150  FIRST  LESSONS  ON  MONEY. 

ing3'oiirself  or  others.  In  becoming  security 
for  another,yoa  not  only  indorse  his  honesty,' 
but  also  his  business  ability,  and  often  you 
take  the  risk  for  him  as  well  as  for  yourself 
of  having  unfavorable  seasons,  and  of  having 
hard  times  brought  on  by  artilicial  as  well 
as  natural  causes.  It  is  a  risk  that  no  one 
ought  to  assume.  "Be  not  thou  one  of  them 
that  strike  hands,  or  of  them  that  are  sure- 
ties for  debts."— Prov.  22:  26. 

5.  Maintain  good  habits.  The  great 
enemy  of  the  workingmen  of  this  country  is 
not  the  capitalist  but  the  saloon  keepei".  It 
takes  but  a  little  time  to  spend  the  largest 
salary  or  the  laigest  fortune  at  the  bar  and 
at  the  gambling  table. 

Ex-Governor  and  ex-Senator  Sprague  of 
Rhode  Island  spent  a  fortune  of  twelve  mill- 
ion dollars  in  twentj'^  years.  From  being  an 
acknowledged  leader  in  business,  society,and 
politics,  he  became  a  poor,  degraded,  base 
sensualist.  His  drunken  brutality  drove  from 
him  his  devoted,  accomplished  wife, daughter 
of  the  honored  Chief  Justice  Chase. 

But  other  habits  besides  the  drinking 
habit  keep  men  in  poverty.      Theatre  going, 


HOW  TO  MAKE  MONEY.  151 

costly   entertainm'-nts,    cigar   smoking    and 
tobacco  using  keep  many  poor. 

"In  early  life,"  says  a  New  York  mer- 
chant, "I  smoked  six  cigars  a  day,  at  six 
and  a  half  cents  each  ;  they  averaged  that. 
I  thought  to  myself  one  day:  'I'll  just  put 
aside  all  the  money  I  am  consuming  in  ci- 
gars, and  all  I  would  consume  if  I  went  on 
in  this  habit,  and  I  will  see  what  it  will  come 
to  by  compound  interest.'  Last  July  com- 
pleted thirty -nine  years  since,  by  the  grace 
of  God,  I  was  emancipated  from  the  filthy 
habit,  and  the  savings  amounted  to  the  en- 
ormous sum  of  $29,102.03  by  compound  in- 
terest. We  lived  in  the  city,  but  the  chil- 
dren, who  had  learned  something  of  country 
life  from  their  annual  visits  to  their  grand- 
parents, longed  for  a  home  among  the  green 
fields.  I  noticed  a  very  pleasant  place  in 
the  country  for  sale.  The  cigar  money  now 
came  into  requisition,  and  I  found  that  it 
was  large  enough  to  purchase  the  place,  and 
it  is  mine.  I  wish  all  could  see  how  my 
children  enjoy  their  home." 
.  You  say  you  wish  to  enjoy  life  as  you  go 
along;  but  that  is  a  poor  kind  of  enjoyment 


152  FIRST  LESSONS  OX  MONEY. 

which  iindeimines  the  health.  That  tobacco 
does  this  has  been  sadl}^  demonstrated. 

Says  the  London  Lancet^  one  of  the 
ablest  medical  Journals  in  the  world.  "The 
influence  of  tobacco  is  apparently  cumula- 
tive. A  warning  sense  of  excess  in  the  use  of 
tobacco  generally  comes  too  late." 

Only  a  few  of  the  more  resolute  ones  heed 
the  prenionitor}^  warning.  Says  Chauncy 
M.  Depew,  President  of  the  New  York  Cen- 
tral lailroad:  "I  was  a  confirmed  smoker, 
smoking  twenty  cigars  a  day,  up  to  about  a 
dozen  years  ago,  when  I  gave  up  the  habit. 
I  now  do  not  use  tobacco.  Twelve  or  thir- 
teen years  ago  I  found  myself  suffering  from 
indigestion,  with  wakeful  fits  at  night,  nerv- 
ousness and  inability  to  submit  to  much 
mental  strain.  I  was  walking  up  Broadway, 
I  took  the  cigar  out  of  my  mouth  and  looked 
at  it.  I  had  smoked  about  an  inch  of  it.  A 
thought  struck  me.  I  had  been  reading  a 
jrerman  savant's  book  on  the  unhealthfulness 
of  the  use  of  tobacco.  I  looked  at  my  cigar 
and  I  said,  'you  are  responsible  for  this  mis- 
chief.' I  thiew  it  into  the  gutter  and  re- 
solved not  to  smoke  again.     For  six  months 


HOW  TO  MAKE  MONEY.  153 

I  siiffeied  the  torments  of  the  damned.  I 
wanted  to  smoke  but  I  resolutely  lef  used.  My 
ajtpetite  meanwhile  was  growing  better,  my 
sleep  was  growing  sounder  and  I  could  do 
more  work. 

"I  found  the  use  of  tobacco  was  affecting 
my  physical  system  and  I  stopped  it  entire- 
ly and  have  not  commenced  it  again  and 
probably  never  shall." 

If  you  maintain  good  habits  you  will 
natuially  keep  good  company.  This  has, 
in  many  ways,  much  to  do  with  one's  success 
in  life.  Said  the  gieat  merchant  already 
referred  to,  "When  I  began  business  for  my- 
self as  a  merchant,  according  to  the  custom 
of  that  time,  I  went  to  IS'^ew  York  to  buy  a 
bill  of  goods  on  credit.      I  reached  there  on 

Saturday,  was  invited  by to  stay  with 

him  over  the  Sabbath.  I  did  so,  and  went 
with  him  to  church  all  day,  Monday  morn- 
ing I  started  out  to  make  my  purchases.  I 
found  goods  and  prices  that  suited  me, 
at  a  -large  wholesale  house.  I  spoke 
to  the  proprietor  of  opening  an  account 
and  offered  to  show  him  my  recommenda- 
tions, of  which  I  had  a  good   supply.     He 


154  FIRST  LESSONS  ON  MONEY. 

said  he  did  not  want  to  see  tliem, — he  was 
ready  to  trust  me. 

"But,"  I  urged,  "I  am  a  stranger  in  the 
city." 

"Did  you  not,'"  he  asked,  "go  to  church 

yesterday  with  Mr.  ,  and  sit  with  him 

in  his  pew  ?" 

"I  did." 

"Any  man  who  goes  to  church  with  Mr. 

,  and  sits   with  him,  can  have  all   the 

goods  he  wants  out  of  my  store  on  credit.' 

"I  saw  then  that  a  man's  credit  is  affected 
by  the  company  he  keeps.'" 

6.  Be  willing  to  commence  business  on  a 
small  scale.  Follow  up  great  rivers  and  you 
will  find  they  come  from  little  brooks. 
Many  of  the  large  business  enterprises  of 
this  country  had  small  beginnings.  The  late 
A.  T,  Stewart,  the  great  merchant  prince, 
taught  school  until  he  earned  enough  to  start 
a  small  store.  He  raised  up  a  business  that 
his  successors,  though  trained  by  himself, 
could  not  carry  on  successfully.  The  Rem- 
ington Works,  which,  at  one  time,  employed 
a  small  army  of  men,  originated  in  a  com- 
mon blacksmith   shop.     The  founder  ham- 


HOW  TO  MAKE  MONEY.  155 

mered  out  for  himself  at  the  anvil  a  gun- 
barrel  of  such  excellence  that  others  wanted 
him  to  make  one  like  it  for  them.  So  many 
orders  came  in  that  he  was  obliged  to 
construct  machinery  to  enable  him  to  fill 
them;  and  the  works  gradually  grew  to 
mammoth  proportions. 

Many  of  our  great  papers  were  started  by 
men  who  posessed  a  talent  for  hard  work 
but  had  very  little  money.  Horace  Greely, 
a  journeyman  printer,  without  capital, found- 
ed the  New  York  Tribune,  and  left  it,  when 
he  died,  worth  one  million  dollars,  Mr.  Ben- 
nett started  the  New  York  Herald  without 
capital,  and  was  its  sole  editor,  reporter  and 
business  manager,  and  now  it  is  said  it  could 
not  be  bought  for  five  million  dollars.  The 
Philadelphia  Ledger  was  started  by  three 
workingmen  whose  capital  was  their  intelli- 
gence and  industry  and  they  thus  founded 
a  newspaper  concern  worth,  it  is  said,  three 
million  dollars. 

7.  Be  benevolent  in  the  use  of  money. 
It  takes  but  little  to  supply  the  wants  of 
one.  A  man  is  never  fully  a  man  till  he  be- 
gins to  care  for  others. 


1^6  FIRST  LESSONS  ON  MONEY. 

Systematic  benevolence  aids  one  to  be 
systematic  in  business  and  tlms  in  itself  it 
contributes  to  success.  "There  is  that 
scattereth,  and  yet  increaseth;  and  there  is 
that  withholdeth  more  than  is  meet,  but  it 
tendeth  to  poverty.'' — Prov.  11:  24. 

Baron  Rothschild  had  the  following  max- 
ims framed  and  hmia'  up  in  his  banking 
house: 

"Attend  carefully  to  the  details  of  your 
business. 

Be  prompt  in  all  things. 

Consider  well,  then  decide  positively. 

Dare  to  do  right.     Fear  to  do  wrong. 

Endure  trials  patiently. 

Fight  life's  battles  bravely,  manfully. 

Go  not  into  the  society  of  the  vicious. 

Hold  integrity  sacred. 

Injure  not  another's  reputation  or  busi- 
ness. 

Join  hands  only  with  the  virtuous. 

Keep  your  mind  from  evil  thoughts. 

Lie  not  for  any  consideration. 

Make  few  acquaintances. 

Never  try  to  appear  what  you  are  not. 

Observe  good  manners. 


HOW  TO  MAKE  MONEY.  157 

Pay  your  debts  promptly. 

Question  not  the  veracity  of  a  friend. 

Respect  the  counsel  of  your  parents. 

Sacrifice  money  rather  tlian  principle. 

Touch  not,  taste  not,  handle  not  intoxica- 
ting drinks. 

Use  your  leisure  time  for  improvement. 

Venture  not  upon  the  threshold  of  wrong. 

Watch  carefully  over  your  passions. 

Extend  to  every  one  a  kindly  salutation. 

Yield  not  to  discouragements. 

Zealously  labor  for  the  right.  Success  is 
yours." 

To  these  maxims  add  John  Wesley's  three 
rules: 

1.  Gain  all  you  can. 

2.  Save  all  you  can. 

3.  Give  all  you  can. 


CHAPTER  XVI. 

CONCLUSION. 

^HE  money  question  is  one  that  every 
7  intelligent  American  citizen  who  aims  to 
cast  a  conscientious  ballot  should  endeavor 
to  understand.  It  is  in  his  power  to  compre- 
hend it  and  he  should  give  it  a  careful,  can- 
did investigation. 

2.  All  money,  no  matter  of  what  materi- 
al it  is  composed,  is  constituted  money  by 
the  supreme  authority  oi  the  land.  IN  either 
silver  nor  gold,  until  it  is  duly  coined,  is 
money, any  more  than  farms, or  cattle, or  dia- 
monds are  money.  Any  one  may  buy  them 
that  chooses,  but  no  one  is  obliged  to  take 
them  in  payment  of  debt. 

3.  Both  gold  |and  silver  should  be  used 
for  making  our  metallic  money.  To  stop  the 
coinage  of  silver  would  act  oppressively  upon 
every  class  in  the  community  except  credi- 
tors. It  would  double  the  value  of  all  debts, 
National,  State,  municipal,  and  private,  and 


CONCLUSION.  159 

would  cause  a  general  derangement  and 
prostration  of  business.  In  its  effects  it 
would  be  legalized  robbery.  No  limit  should 
be  put  upon  the  coinage  of  silver  any  more 
than  upon  that  of  gold.  But  no  nation 
wliich  has  depreciated  the  value  of  silver  in 
the  general  market  by  demonetizing  it  should 
be  allowed  to  take  advantage  of  our  continu- 
ing to  coin  silver  and  so  get  a  higher  price 
for  the  silver  it  has  to  sell  than  it  will  bring 
in  the  market  of  the  world.  This  they  might 
do  under  a  system  of  "free  coinage  "  Be- 
tween the  years  1873  and  1879  Germany  sold 
3220  tons  of  siber.  But  as  our  government 
buys  the  silver  which  it  coins,  at  the  market 
price  of  bullion,  England  and  Germany  can 
get  no  more  for  their  silver  here  than  they 
can  elsewhere.  They  cannot,  as  far  as  we 
are  concerned,  take  advantage  of  their  wrong. 
As  they  can  get  no  more  for  their  silver  here 
than  they  can  elsewhere,  we  are  in  no  danger 
of  any  great  influx  of  silver  from  those  coun- 
tries. 

4.  All  paper  money  should  be  issued  by 
the  National  govertiment.  The  amount 
which  it  may  issue  should  be  restricted  and 


160  FIRST  LESS0N8  ON  MONEY. 

kept  within  sucli  limits  that  it  will  always 
he  as  good  as  gold  or  silver.  The  Govern- 
ment should  issue  paper  certificates  for  all 
the  gold  and  silver,  either  in  coin  or  bullion, 
that  may  be  deposited  with  it. 

5.  There  should  be  an  ample  supply  of 
money  to  meet  all  the  wants  of  the  people. 
Nothing  but  money  should  be  allowed  to 
possess  the  attribute  of  money.  An  end 
should  be  put  to  the  countless  villainies  that 
are  practiced  by  reason  of  givi  ng  to  evidences 
of  indebtedness  a  degree  of  validity  in  the 
hands  of  third  parties  which  they  would  not 
possess  if  held  by  those  to  whom  they  were 
given. 

6.  Our  laws  should  make  it  difficult  for 
one  man  to  amass  a  vast  fortune  and  keep 
it  in  his  family  from  generation  to  generation. 
The  property  of  the  country  should  be  held 
by  the  people  at  large. 

7.  The  people  should  see  to  it  that  their 
representatives  in  Congress  pass  laws  in  their 
interest,  and  not  in  favor  of  the  moneyed 
class  and  rich  corporations  to  the  injury  of 
community  generally."  "Eternal  vigilance 
is  the  price  of  liberty."    . 


UNIVERSITY  OF  CALIFORNIA  AT  LOS  ANGELES 

THE  UNIVERSITY  LIBRARY 
This  book  is  DUE  on  the  last  date  stamped  below 


MAR  25  ^^ 


UCSOUTHtKMKti.l' 


AA    000  601  502    8 


